Raisins Produced From Grapes Grown in California; Use of Estimated Trade Demand to Compute Volume Regulation Percentages

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[Docket No. FV99-989-4 PR]

Raisins Produced From Grapes Grown in California; Use of

Estimated Trade Demand to Compute Volume Regulation Percentages

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule invites comments on using an estimated trade demand

figure to compute volume regulation percentages for 1999-2000 crop

Natural (sun-dried) Seedless (NS) raisins covered under the Federal

marketing order for California raisins (order). The order regulates the

handling of raisins produced from grapes grown in California and is

administered locally by the Raisin Administrative Committee

(Committee). This rule would provide parameters for implementing volume

regulation for 1999-2000 crop NS raisins if supplies are short for the

purposes of maintaining a portion of the industry's export markets and

stabilizing the domestic market.

DATES: Comments must be received by July 19, 1999.

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) 720-5698; or E-mail:

[email protected]. 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: (559) 487-5901, Fax: (559) 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) 720-5698. Small businesses may request information on complying

with this regulation, or obtain a guide on complying with fruit,

vegetable, and specialty crop marketing agreements and orders 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) 720-

5698, or E-mail: Jay.G[email protected]. You may view the marketing

agreement and order small business compliance guide at the following

web site: http://www.ams.usda.gov/fv/moab.html.

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. This rule is not intended to have retroactive effect.

This rule will not preempt any State or local laws, regulations, or

policies, unless they present an irreconcilable conflict with this

rule.

The Act provides that administrative proceedings must be exhausted

before parties may file suit in court. Under section 608c(15)(A) of the

Act, any handler subject to an order may file with the Secretary a

petition stating that the order, any provision of the order, or any

obligation imposed in connection with the order is not in accordance

with law and request a modification of the order or to be exempted

therefrom. A handler is afforded the opportunity for a hearing on the

petition. After the hearing, the Secretary would rule on the petition.

The Act provides that the district court of the United States in any

district in which the handler is an inhabitant, or has his or her

principal place of business, has jurisdiction in equity to review the

Secretary's ruling on the petition, provided an action is filed not

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

This rule invites comments on using an estimated trade demand

figure to compute volume regulation percentages for 1999-2000 crop NS

raisins covered under the order. This rule would provide parameters for

implementing volume regulation for 1999-2000 crop NS raisins if

supplies are short for the purposes of maintaining a portion of the

industry's export markets and stabilizing the domestic market. This

action was recommended by the Committee at a meeting on April 13, 1999.

Volume Regulation Authority

The order provides authority for volume regulation designed to

promote orderly marketing conditions, stabilize prices and supplies,

and improve producer returns. When volume regulation is in effect, a

certain percentage of the California raisin crop may be sold by

handlers to any market (free tonnage) while the remaining percentage

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

the Committee. Reserve raisins are disposed of through certain programs

authorized under the order. For instance, 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. Net proceeds

from sales of reserve raisins are distributed to the reserve pool's

equity holders, primarily producers.

Section 989.54 of the order prescribes procedures and time frames

to be followed in establishing volume regulation for each crop year,

which runs from August 1 through July 31. The Committee must meet by

August 15 to review data regarding raisin supplies. At that time, the

Committee computes a trade demand for each varietal type for

[[Page 34572]]

which a free tonnage percentage might be recommended. Trade demand is

equal to 90 percent of the prior year's domestic and export shipments,

adjusted by subtracting carryin inventory from the prior year, and

adding a desirable carryout inventory for the end of the current year.

By October 5, the Committee must announce preliminary crop

estimates and determine whether volume regulation is warranted for the

varietal types for which it computed trade demands. Preliminary volume

regulation percentages are then computed to release 85 percent of the

computed trade demand if a field price has been established, or 65

percent of the trade demand if no field price has been established.

Field price is the price that handlers pay for raisins from producers.

By February 15, the Committee must recommend final free and reserve

percentages which release the full trade demand.

The order also requires that, when volume regulation is in effect,

two offers of reserve raisins must be made available to handlers for

free use. These offers are known as the ``10 plus 10'' offers. Each

offer consists of a quantity of reserve raisins equal to 10 percent of

the prior year's shipments. The order also specifies that ``10 plus

10'' raisins must be sold to handlers at the current field price plus a

3 percent surcharge and Committee costs.

Development of Export Markets

With the exception of 10 crop years, volume regulation has been

utilized for NS raisins since the order's inception in 1949. The

procedures for determining volume regulation percentages have been

modified over the years to address the industry's needs. In the past,

volume regulation has been utilized primarily to help the industry

manage an oversupply of raisins. Through the use of various marketing

programs operated through reserve pools and other industry promotional

activities, the industry has also developed its export markets which

now account for almost 40 percent of the industry's shipments.

Between 1980-85, exports of California NS raisins averaged about 26

percent (53,700 packed tons, or raisins which have been processed) of

the industry's total NS raisin shipments (207,600 packed tons,

excluding government purchases) per year. Between 1993-97, NS raisin

exports increased to average about 37 percent (112,000 packed tons) of

the industry's total NS raisin shipments (300,000 packed tons,

excluding government purchases) per year.

Export Replacement Offer

One market development program operated through reserve pools, the

Export Replacement Offer (ERO), has helped U.S. raisins to be price

competitive in export markets. Prices in export markets are generally

lower than the domestic market. The ERO began in the early 1980's as a

``raisin-back'' program whereby handlers who exported California

raisins could purchase, at a reduced price, reserve raisins for free

use. This effectively blended down the cost of the raisins which were

exported. The NS raisin ERO was changed to a ``cash-back'' program in

1996 whereby handlers could receive cash from the reserve pool for

export shipments.

Over the past 5 years, an average of 43,000 natural condition tons

(unprocessed raisins) of reserve raisins have been utilized per year to

fund the ERO. Financing for the cash-back ERO program has been

generated primarily from the Committee's ``10 plus 10'' sales of

reserve raisins to handlers for free use. Under the 1996 and 1997 cash-

back ERO programs, an average of $57 million of reserve pool funds were

utilized to support the export of about 113,000 packed tons of NS

raisins.

Current Industry Situation--Potential of Two, Consecutive Short

Crops

The Committee is concerned with maintaining the ERO program through

potentially two, consecutive short crop years. The 1998-99 California

raisin crop was much smaller than average due to the combined effect of

adverse crop conditions created by the weather phenomenon known as El

Nino, scattered rain during the fall harvest, and a shortage of labor

once the grapes were ready for harvest. The 1998-99 NS raisin crop is

estimated at 235,000 natural condition tons, about 35 percent lower

than the 10-year average of 360,183 natural condition tons. Volume

regulation was not implemented for 1998-99 NS raisins, the major

varietal type of California raisin, for the first time in 16 years.

However, about 60,000 natural condition tons of 1997-98 reserve raisins

were available to maintain the industry's ERO program.

The Committee is concerned that the 1999-2000 California raisin

crop may also be short due to an April 1999 frost and anticipated high

demand for raisin-variety grapes from wineries next fall. If no 1999-

2000 reserve were established, the industry would not be able to

continue the ERO program. Without a program to support its export

sales, the Committee is concerned that the industry could lose a

significant portion, perhaps 50 percent, of those markets. Further,

handlers who could not sell their raisins in export may sell their

raisins domestically. Annual domestic shipments of NS raisins for the

past 5 years have averaged about 188,000 packed tons. The Committee is

concerned that additional raisins sold into the domestic market could

create instability.

Thus, the Committee formed a working group to review this issue and

consider options to continue to support its export sales while

maintaining stability in the domestic market. After several meetings,

the working group presented its recommendation to a subcommittee, and

then in turn to the Committee. At a meeting on April 13, 1999, the

Committee recommended adding a new paragraph to Sec. 989.154 of the

order's administrative rules and regulations that would provide

parameters for implementing volume regulation for 1999-2000 crop NS

raisins if supplies are short. Section 989.154 would be divided into

two paragraphs, (a) and (b). Paragraph (a) would pertain to an existing

regulation regarding desirable carryout levels, and paragraph (b) would

pertain to estimated trade demand.

Implementing Volume Regulation if Supplies are Short To Maintain

the ERO

Section 989.54(e) contains a list of factors that the Committee

must consider when computing volume regulation percentages. Factor (4)

states that the Committee must consider, if different than the computed

trade demand, the estimated trade demand for raisins in free tonnage

outlets. The Committee recommended using an estimated trade demand

figure for 1999-2000 crop NS raisins, or a figure different than the

computed trade demand, to compute volume regulation percentages to

create a reserve if supplies are short. This would allow the Committee

to continue its ERO program thereby maintaining a portion of its export

sales and stabilizing the domestic market.

Specifically, the Committee recommended that an estimated trade

demand be utilized to compute preliminary, interim, and final free and

reserve percentages for 1999-2000 crop NS raisins if the crop estimate

is equal to, less than or no more than 10 percent greater that the

trade demand as computed according to the formula specified in

Sec. 989.54(a) of the order. If an estimated trade demand figure is

utilized, the final reserve percentage would be no more than 10

percent. Finally, volume regulation would not be

[[Page 34573]]

implemented if the 1999-2000 crop estimate is below 235,000 natural

condition tons.

To illustrate how this would work, the Committee would compute a

trade demand for NS raisins by August 15 (as an example, 260,000

natural condition tons). At that time, the Committee would also

announce its intention to use an estimated trade demand of 235,000

natural condition tons to compute volume regulation percentages for the

1999-2000 crop.

Crop Estimate Below 235,000 Tons--No Regulation

The Committee would meet by October 5 to announce a NS crop

estimate and determine whether volume regulation was warranted. Under

the Committee's proposal, if the 1999-2000 crop estimate is under

235,000 natural condition tons, volume regulation would not be

recommended. With a crop of 235,000 natural condition tons, and about

82,000 natural condition tons of NS raisins projected to be carried

forward from the 1998-99 crop year, a supply of about 317,000 natural

condition tons of raisins would be available for the 1999-2000 crop

year. As previously mentioned, annual NS raisin shipments average about

300,000 packed tons (about 320,000 natural condition tons), excluding

government purchases.

With an available supply of only 317,000 natural condition tons of

NS raisins, the Committee believes that the industry's first priority

would be to satisfy the needs of the domestic market, which absorbs

annually an average of about 188,000 packed tons (200,000 natural

condition tons). Assuming that 200,000 natural condition tons were

shipped domestically, the Committee estimates that, with no ERO program

to help U.S. raisins be price competitive in export markets, the

industry would export about half of its usual tonnage, or about 60,000

natural condition tons. The remaining 57,000 natural condition tons

would likely be held in inventory for the following 2000-2001 crop

year. Annual carryout inventory for NS raisins for the past 5 years has

averaged about 100,000 natural condition tons.

Crop Estimate Between 235,000 Tons and 10 Percent Above the

Computed Trade Demand--Volume Regulation

If the October 1999-2000 crop estimate for NS raisins falls between

235,000 natural condition tons and 10 percent above the computed trade

demand, the Committee would use an estimated trade demand figure to

compute preliminary free and reserve percentages for the 1999-2000

crop. Thus, using the 260,000 natural condition ton computed trade

demand figure, an estimated trade demand would be used to compute

volume regulation percentages if the crop estimate falls between

235,000 and 286,000 natural condition tons.

The order specifies that preliminary percentages compute to release

85 percent of the computed trade demand as free tonnage once a field

price is established. Producers are paid the field price for their free

tonnage. Normally, when preliminary percentages are computed, producers

receive an initial payment from handlers for 85 percent of the computed

trade demand (or 65 percent of the trade demand if no field price has

been established). Using the 260,000 natural condition ton computed

trade demand figure, this would equate to 238,000 natural condition

tons. However, if the lower, 235,000 natural condition ton estimated

trade demand figure were utilized to compute preliminary percentages,

producers would receive an initial payment from handlers for only

199,750 natural condition tons, or 71 percent of the computed trade

demand.

The Committee is concerned with the preliminary percentage

computation using an estimated trade demand and its impact on producer

returns. The Committee wants to ensure that producers receive the field

price for as much of their crop as possible early in the season while

still establishing a small pool of reserve raisins to maintain the ERO.

Thus, the Committee recommended that, if an estimated trade demand

figure is utilized, preliminary percentages be computed to release 85

percent of the crop estimate. However, the order specifies that

preliminary percentages be computed to release 85 percent of the trade

demand, not the crop estimate, once a field price is established.

To achieve the same objective but remain within the order's

parameters, the Committee could compute interim percentages to equal 85

percent free and 15 percent reserve. Pursuant to Sec. 989.54(c),

interim percentages may be computed prior to February 15 to release

less than the trade demand. As an example, with a crop estimate of

265,000 natural condition tons and an estimated trade demand of 238,500

natural condition tons, a free percentage of 85 percent of the crop

estimate would release 225,250 natural condition tons of raisins, or 94

percent of the estimated trade demand. This action would mollify the

impact of implementing volume regulation when supplies are short on

producers by allowing them to be paid for as much of their free tonnage

raisins as possible early in the season.

Finally, the Committee would meet by February 15 to compute final

free and reserve percentages. The Committee recommended that if an

estimated trade demand figure is used to compute percentages, the final

reserve percentage be computed to equal no more than 10 percent.

Producers would ultimately be paid the field price for 90 percent of

their crop, or their free tonnage.

The remaining 10 percent of the crop would be held in reserve and

offered for sale to handlers in the ``10 plus 10'' offers. As

previously described, the ``10 plus 10'' offers are two offers of

reserve raisins that are made available to handlers for free use. The

order specifies that each offer consists of a quantity of reserve

raisins equal to 10 percent of the prior year's shipments. This

requirement would not be met if volume regulation were implemented when

raisin supplies were short. However, all of the raisins held in reserve

would be made available to handlers for free use. Handlers would pay

the Committee for the ``10 plus 10'' raisins and that money would be

utilized to fund a 1999-2000 ERO program. Any unused 1999-2000 reserve

pool funds could be loaned forward to initiate a 2000-2001 ERO program.

However, the Committee recommended that such funds be paid back to the

1999-2000 reserve pool and ultimately be returned to 1999-2000 equity

holders.

Crop Estimate More Than 10 Percent Above the Computed Trade Demand

Finally, the Committee recommended that, if the 1999-2000 crop

estimate is more than 10 percent greater than the computed trade demand

(or above 286,000 natural condition tons in the earlier example), the

computed trade demand (as an example, 260,000 natural condition tons)

would be utilized to compute volume regulation percentages. Under this

scenario, enough raisins (over 28,000 natural condition tons) would be

available in reserve to continue the ERO program.

It is anticipated that allowing the use of an estimated trade

demand figure to compute volume regulation percentages for 1999-2000

crop NS raisins if supplies are short would assist the industry in

maintaining a portion of its export markets and stabilize the domestic

market. If the crop estimate is below 235,000 natural condition tons,

no volume regulation would be implemented. If this occurs, it is

anticipated that domestic market needs would be met, while export

markets would likely not be satisfied.

[[Page 34574]]

However, if the crop falls between 235,000 natural condition tons

and slightly higher than the computed trade demand, establishing a

small reserve pool would allow the industry to not only satisfy the

needs of the domestic market, but also maintain a portion of its export

sales, which now account for almost 40 percent of the industry's annual

shipments. By maintaining an ERO program, even at a reduced level,

exporters could continue to be price competitive and sell their raisins

abroad. The domestic market would remain stable because it would not

have to absorb any additional raisins that handlers could not afford to

sell in export markets.

Initial Regulatory Flexibility Analysis

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.

This rule would add a new paragraph to Sec. 989.154 of the order's

administrative rules and regulations that would provide parameters for

using an estimated trade demand figure specified in Sec. 989.54(e)(4)

of the order to compute volume regulation percentages for 1999-2000

crop NS raisins. This rule would provide guidelines for the use of

volume regulation if 1999-2000 NS raisin supplies are short for the

purposes of maintaining a portion of the industry's export markets and

stabilizing the domestic market.

Regarding the impact of the action on producers and handlers, under

the Committee's proposal, if an estimated trade demand figure was used

to compute volume regulation percentages, the final reserve percentage

would compute to no more than 10 percent. Producers would thus be paid

the field price for at least 90 percent of their crop, but would lose

being paid the field price for about 10 percent of their crop that

would go into a reserve pool. The field price for NS raisins for the

past 5 years has averaged $1,216 per ton. Handlers in turn would

purchase 90 percent of their raisins directly from producers at the

field price, but would have to buy remaining raisins out of the reserve

pool at a higher price (field price plus 3 percent and Committee

costs). The ``10 plus 10'' price of NS reserve raisins has averaged

about $100 higher than the field price for the past 5 years, or $1,316

per ton. Proceeds from the ``10 plus 10'' sales would be used to

support export sales.

While there may be some initial costs for both producers and

handlers, the long term benefits of this action far outweigh the costs.

The Committee believes that with no reserve pool and hence no ERO

program, export sales would decline dramatically, perhaps up to 50

percent. Handlers would likely sell into the domestic market raisins

that they were unable to sell into lower priced export markets.

Additional NS raisins sold into the domestic market, which typically

absorbs about 188,000 packed tons, could create instability. The

industry would likely lose a substantial portion of its export markets,

which now account for about 37 percent (112,000 packed tons) of the

industry's annual shipments (300,000 packed tons, excluding government

purchases). Committee members have also commented that, once export

markets were lost, it would be difficult and costly for the industry to

recover those sales.

Maintaining the industry's export markets would, in turn, help the

industry maximize its 1999-2000 total shipments and prevent handlers

from carrying forward large quantities of inventory into the 2000-2001

crop year. If the industry is unable to maximize its 1999-2000

shipments, carryin inventory could be high which would result in a

lower computed trade demand figure for the 2000-2001 crop year. If the

industry returns to its pattern of relatively large crops in 2000-2001,

a low trade demand and large crop estimate would compute to a low free

tonnage percentage. Since producers are paid significantly more for

their free tonnage than for reserve tonnage, this would mean reduced

returns to producers. Projected reduced 2000-2001 returns to raisin

producers, coupled with the risks of rain and labor shortages during

harvest, may influence producers to ``go green,'' or sell their raisin-

variety grapes to the fresh-grape, wine, or juice concentrate markets.

Additional supplies to those outlets could potentially reduce ``green''

returns as well.

A similar scenario occurred in the California raisin industry in

the early 1980's where the industry experienced two consecutive, short

crop years. The 1981-82 and 1982-83 crops were short followed by

relatively large crops for the remainder of the 1980's. The producer

field price for NS raisins was $1,275 per ton for 1981-82 crop raisins,

and $1,300 per ton for 1982-83 crop raisins. No volume regulation was

implemented in 1982-83. However, a large inventory of high-priced

raisins was carried forward into the 1983-84 crop year. When coupled

with the largest crop on record at the time, volume regulation was

implemented for the 1983-84 crop with the free tonnage percentage at a

historically low 37.5 percent. By 1984, the producer field price for

free tonnage raisins fell to $700 per ton, causing producers to

experience large financial losses. Thus, the industry wants to help

avoid a repeat of what happened in the 1980's by utilizing the Federal

order to maintain export sales and provide stability in the domestic

market.

Several alternatives to the proposed action were considered by the

industry. As previously mentioned, the Committee formed a working group

to address its concerns. The working group considered utilizing money

remaining in the 1997-98 reserve pool to fund some portion of an ERO.

About $22 million would be available. However, because there was no

1998-99 reserve, the 1997-98 pool will ultimately fund at least 16

months of an ERO program. Ideally, the Committee would like to see each

reserve pool support one year of an ERO program. Unfortunately, because

of variances in crop size, the spread in price between the domestic and

export markets, and other factors, this goal is not always met. In any

event, the Committee agreed that any remaining 1997-98 reserve pool

funds could be loaned forward to initiate a 1999-2000 ERO program, but

those funds would have to be paid back and ultimately returned to the

1997-98 equity holders.

A second alternative considered by the working group was to fund

the ERO through an increased assessment rate.

[[Page 34575]]

The current assessment rate is $8.50 per ton for raisins acquired by

handlers. The Committee estimated that the rate would need to be

increased to at least $60 per ton for acquired raisins. The Department

had concerns with such an increase as well as whether the ERO could be

funded through the order's assessment authority.

A third alternative considered by the working group was to change

the order's desirable carryout formula. Desirable carryout is part of

the order's trade demand formula and is the amount of tonnage from the

prior crop year needed during the first part of the next crop year to

meet market needs, before new crop raisins are available for shipment.

Desirable carryout is specified in the order's regulations and is equal

to 2\1/2\ months of the prior year's shipments. Changing the desirable

carryout changes the trade demand computation. The working group

considered developing a sliding scale which would match crop estimates

with levels of carryout inventory. However, after much discussion, the

working group ultimately recommended to the Committee using an

estimated trade demand to compute volume regulation percentages next

year if NS raisin supplies are short.

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. If volume regulation were

implemented next year using an estimated trade demand figure, the

requirements on handlers would be identical to those requirements

imposed in past seasons when volume regulation was implemented. As

previously stated, volume regulation has been utilized in all but 10

seasons for NS raisins since the inception of the order in 1949. Thus,

handlers are familiar with the requirements.

Furthermore, this action would not impose any additional reporting

or recordkeeping burden 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. The information and recordkeeping requirements have

been previously approved by the Office of Management and Budget (OMB)

under OMB Control No. 0581-0178. As with other similar marketing order

programs, reports and forms are periodically reviewed to reduce

information requirements and duplication by industry and public sector

agencies. Finally, the Department has not identified any relevant

Federal rules that duplicate, overlap or conflict with this rule.

In addition, the Committee's working group meetings held on

February 24, March 10, March 18, April 6, 1999, and the subcommittee

and Committee meetings on April 13, 1999, where this action was

deliberated were all public meetings widely publicized throughout the

raisin industry. The Committee held a follow-up meeting on June 10,

1999, to further educate the industry on its recommendation. All

interested persons were invited to attend the meetings and participate

in the industry's deliberations.

Further, two major industry organizations, Sun-Maid Growers of

California (Sun-Maid) and the Raisin Bargaining Association (RBA), have

held meetings to provide additional information to their members on the

Committee's recommendation. Sun-Maid and the RBA represent about 70

percent of the California raisin industry. Finally, all interested

persons are invited to submit information on the regulatory and

informational impacts of this action on small businesses.

A 20-day comment period is provided to allow interested persons to

respond to this proposal. Twenty days is deemed appropriate because

this action, if adopted, should be in place by the beginning of the

1999-2000 crop year, August 1. All written comments timely received

will be considered before a final determination is made on this matter.

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

proposed to be 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.

Sec. 989.154 [Amended]

2. The undesignated center heading preceding Sec. 989.154 is

revised to read ``Marketing Policy.''

3. Section 989.154 is revised to read as follows:

Sec. 989.154 Marketing policy computations.

(a) Desirable carryout levels. The desirable carryout levels to be

used in computing and announcing a crop year's marketing policy shall

be equal to total shipments of free tonnage of the prior crop year

during August, September, and one-half of October, for each varietal

type, converted to a natural condition basis: Provided, That, should

the prior year's shipments be limited because of crop conditions, the

Committee may select the total shipments during the months of August,

September, and one-half of October during one of the three crop years

preceding the prior crop year.

(b) Estimated trade demand. Pursuant to Sec. 989.54, paragraph

(e)(4), estimated trade demand is a figure different than the trade

demand computed according to the formula in Sec. 989.54, paragraph (a).

The Committee shall use an estimated trade demand to compute

preliminary and interim free and reserve percentages, or determine such

final percentages for recommendation to the Secretary for 1999-2000

crop Natural (sun-dried) Seedless (NS) raisins if the crop estimate is

equal to, less than, or no more than 10 percent greater than the

computed trade demand: Provided, That the final reserve percentage

computed using such estimated trade demand shall be no more than 10

percent, and no reserve shall be established if the final 1999-2000 NS

raisin crop estimate is less than 235,000 natural condition tons.

4. A new undesignated center heading is added preceding

Sec. 989.157 to read ``Quality Control.''

Dated: June 23, 1999.

Enrique E. Figueroa,

Administrator, Agricultural Marketing Service.

[FR Doc. 99-16329 Filed 6-23-99; 2:48 pm]

BILLING CODE 3410-02-P