[Federal Register: August 16, 2004 (Volume 69, Number 157)]
[Rules and Regulations]
[Page 50289-50293]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16au04-8]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 989
[Docket No. FV04-989-1 FIR]
Raisins Produced From Grapes Grown in California; Final Free and
Reserve Percentages for 2003-04 Crop Natural (Sun-Dried) Seedless
Raisins
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: The Department of Agriculture (USDA) is adopting, as a final
rule, without change, an interim final rule that established final
volume regulation percentages for 2003-04 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 locally administered by
the Raisin Administrative Committee (Committee). The volume regulation
percentages are 70 percent free and 30 percent reserve. The percentages
are intended to help stabilize raisin supplies and prices, and
strengthen market conditions.
EFFECTIVE DATE: Effective September 15, 2004. The volume regulation
percentages apply to acquisitions of NS raisins from the 2003-04 crop
until the reserve raisins from that crop are disposed of under the
order.
FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Senior Marketing
Specialist, California Marketing Field Office, Marketing Order
Administration Branch, 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, 1400 Independence Avenue SW., STOP 0237, Washington, DC
20250-0237; telephone: (202) 720-2491, Fax: (202) 720-8938.
Small businesses may request information on complying with this
regulation by contacting Jay Guerber, Marketing Order Administration
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence
Avenue SW., STOP 0237, Washington DC 20250-0237; telephone: (202) 720-
2491, Fax: (202) 720-8938, or E-mail: Jay.Guerber@usda.gov.
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.''
USDA 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 continues to establish final
free and reserve percentages for NS raisins for the 2003-04 crop year,
which began August 1, 2003, and ends July 31, 2004. 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 USDA 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. Such
handler is afforded the opportunity for a hearing on the petition.
After the hearing USDA 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 USDA'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 continues in effect final volume regulation percentages
for 2003-04 crop NS raisins covered under the order. The volume
regulation percentages are 70 percent free and 30 percent reserve, and
were established through an interim final rule published on April 22,
2004 (69 FR 21695). 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; or disposed of in other outlets not competitive
with
[[Page 50290]]
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. The
Committee unanimously recommended final percentages on February 12,
2004.
Computation of Trade Demands
Section 989.54 of the order prescribes 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, 2003, 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 computed using a 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 adding the desirable carryout
at the end of that crop year. As specified in Sec. 989.154(a), the
desirable carryout for NS raisins shall equal the total shipments of
free tonnage during August and September for each of the past 5 crop
years, converted to a natural condition basis, dropping the high and
low figures, and dividing the remaining sum by three, or 60,000 natural
condition tons, whichever is higher. For all other varietal types, the
desirable carryout shall equal the total shipments of free tonnage
during August, September and one-half of October for each of the past 5
crop years, converted to a natural condition basis, dropping the high
and low figures, and dividing the remaining sum by three.
At its August 2003 meeting, the Committee computed and announced
the 2003-04 trade demand for NS raisins at 210,933 tons. The August
trade demand, however, did not account for Oleate Seedless raisins
(Oleates). Beginning with the 2003-04 crop year, the NS varietal type
was modified to include Oleates (68 FR 42943; July 21, 2003). Prior to
that time, Oleates were a separate varietal type. The Oleate and NS
trade demands were calculated separately. Then the two individual trade
demand figures were added together to obtain a combined trade demand
reflecting the new combined varietal type. The Committee establishes a
500-ton minimum trade demand for any varietal type for which the
computed trade demand is zero or less. The computed trade demand for
Oleates was less than zero, so the Committee established the trade
demand for Oleates at 500 tons. At USDA's request, the Committee met on
September 9, 2003, and recomputed the combined NS trade demand to
account for Oleates at 211,493 tons (210,933 plus 500).
Computed Trade Demands (natural condition tons)
------------------------------------------------------------------------
NS raisins
------------------------------------------------------------------------
Prior year's shipments...................................... 297,176
Multiplied by 90 percent.................................... 0.90
Equals adjusted base........................................ 267,458
Minus carryin inventory..................................... 116,465
Plus desirable carryout..................................... 60,000
Equals computed trade demand................................ 210,993
Plus Oleate minimum trade demand tons....................... 500
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Equals revised trade demand................................. 211,493
------------------------------------------------------------------------
Computation of Preliminary Volume Regulation Percentages
Section 989.54(b) of the order requires that the Committee
announce, on or before October 5, preliminary crop estimates and
determine whether volume regulation is warranted for the varietal types
for which it computed a trade demand. That section allows the Committee
to extend the October 5 date up to 5 business days if warranted by a
late crop.
The Committee met on October 2, 2003, and announced a preliminary
crop estimate for NS raisins of 276,931 tons, which is about 20 percent
lower than the 10-year average of 348,419 tons. NS raisins are the
major varietal type of California raisin. Adding the carryin inventory
of 116,465 tons, plus the 276,931-ton crop estimate resulted in a total
available supply of 393,396 tons, which was significantly higher (186
percent) than the 211,493-ton trade demand. Thus, the Committee
determined that volume regulation for NS raisins was warranted. The
Committee announced preliminary free and reserve percentages for NS
raisins, which released 85 percent of the computed trade demand since
the field price (price paid by handlers to producers for their free
tonnage raisins) had been established. The preliminary percentages were
65 percent free and 35 percent reserve.
In addition, preliminary percentages were announced for Other
Seedless raisins. It was ultimately determined that volume regulation
was only warranted for NS raisins. As in past seasons, the Committee
submitted its marketing policy to USDA for review.
Computation of Final Volume Regulation Percentages
Pursuant to Sec. 989.54(c), at its February 12, 2004, meeting, the
Committee announced interim percentages for NS raisins to release
slightly less than the full trade demand. Based on a revised NS crop
estimate of 304,072 tons (up from the October estimate of 276,931
tons), interim percentages for NS raisins were announced at 69.75
percent free and 30.25 percent reserve.
Pursuant to Sec. 989.54(d), the Committee also recommended final
percentages at its February 2004 meeting to release the full trade
demand for NS raisins. Final percentages were recommended at 70 percent
free and 30 percent reserve. The Committee's calculations to arrive at
final percentages for NS raisins are shown in the table below:
Final Volume Regulation Percentages (natural condition tons)
------------------------------------------------------------------------
NS raisins
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Trade demand................................................ 211,493
Divided by crop estimate.................................... 304,072
Equals free percentage...................................... 70
100 minus free percentage equals reserve percentage......... 30
------------------------------------------------------------------------
In addition, USDA's ``Guidelines for Fruit, Vegetable, and
Specialty 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
was met for NS raisins by the establishment of final percentages, which
released almost 100 percent of the trade demand, and offers of
additional reserve raisins for sale to handlers for free pursuant to
Sec. 989.54(g) (``10 plus 10 offers''), and Sec. 989.67(j) of the
order.
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. 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. Handlers may sell their 10 plus 10 raisins to any market.
For NS raisins, the first 10 plus 10 offer was made in February
2004, and the second offer was made in April 2004. A total of 61,026
tons was made available to raisin handlers through these offers, and
all of the raisins were purchased. Adding the total figure of 61,026
tons of 10 plus 10 raisins to the
[[Page 50291]]
207,638 tons of free tonnage raisins acquired by handlers from
producers through the week ending June 19, 2004, plus 129,345 tons of
2002-03 carryin NS and Oleate inventory, equates to 398,009 tons of
natural condition raisins, or 373,117 tons of packed raisins, that are
available to handlers for free use or primary markets. This is almost
130 percent of the quantity of NS raisins shipped during the 2002-03
crop year (305,133 natural condition tons or 286,260 packed tons).
(Oleates were included in this computation because, as previously
stated, Oleates were combined with the NS varietal type beginning with
the 2003-04 crop year.)
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, inadequate carryover, 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. When implemented, the additional offers
of reserve raisins make even more raisins available to primary markets,
which is consistent with USDA's Guidelines.
The Committee plans to offer 5,714 tons of 2002-03 NS reserve
raisins for sale to handlers for free use pursuant to Sec. 989.67(j).
Free tonnage deliveries as of June 19, 2004, were 207,638 tons, which
is 3,855 tons below the 211,493-ton trade demand. Offering 3,855 tons
of reserve raisins for sale to handlers for free use would allow the
industry to make available the full 211,493-ton trade demand. Free
tonnage shipments from August 2003 through May 2004 are 1,859 tons
greater than free tonnage shipments during the same period last year.
Adding the 1,859 tons to the 3,855 tons equates to a total of 5,714
tons of reserve being offered to handlers for free use under Sec.
989.67(j) of the order.
Final 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 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.
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 are
defined by the Small Business Administration (13 CFR 121.201) 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
$750,000. 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. No more than 7 handlers, and a
majority of producers, of California raisins may be classified as small
entities.
Since 1949, the California raisin industry has operated under a
Federal marketing order. The order contains authority to, among other
things, limit the portion of a given year's crop that can be marketed
freely in any outlet by raisin handlers. This volume control mechanism
is used to stabilize supplies and prices and strengthen market
conditions.
Pursuant to Sec. 989.54(d) of the order, this rule continues in
effect final volume regulation percentages for 2003-04 crop NS raisins.
The volume regulation percentages are 70 percent free and 30 percent
reserve. 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.
Volume regulation is warranted this season for NS raisins because
acquisitions of 296,625 tons through the week ending June 19, 2004,
combined with the carryin inventory of 129,345 tons, results in a total
available supply of 425,970 tons, which is about 200 percent higher
than the 211,493-ton trade demand. (Oleate inventory was included in
this computation because, as previously stated, Oleates were combined
with the NS varietal type beginning with the 2003-04 crop year.)
The current volume regulation 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 reduce the
burden of oversupplies in the domestic market.
Raisin grapes are a perennial crop, so production in any year is
dependent upon plantings made in earlier years. The sun-drying method
of producing raisins involves considerable risk because of variable
weather patterns.
Even though the product and the industry are viewed as mature, the
industry has experienced considerable change over the last several
decades. Before the 1975-76 crop year, more than 50 percent of the
raisins were packed and sold directly to consumers. Now, over 60
percent of raisins are sold in bulk. This means that raisins are now
sold to consumers mostly as an ingredient in another product such as
cereal and baked goods. In addition, for a few years in the early
1970's, over 50 percent of the raisin grapes were sold to the wine
market for crushing. Since then, the percent of raisin-variety grapes
sold to the wine industry has decreased.
California's grapes are classified into three groups--table grapes,
wine grapes, and raisin-variety grapes. Raisin-variety grapes are the
most versatile of the three types. They can be marketed as fresh
grapes, crushed for juice 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. This type of situation
introduces a certain amount of variability into the raisin market.
Although the size of the crop for raisin-variety grapes may be known,
the amount dried for raisins depends on the demand for crushing. This
makes the marketing of raisins a more difficult task. These supply
fluctuations can result in 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 prices for NS raisins remained fairly
steady from the 1993-94 through the 1997-98 seasons, although
production varied. As shown in the table below, during those years,
production varied from a low of 272,063 tons in 1996-97 to a high of
387,007 tons in 1993-94, or about 42 percent. According to Committee
data, the total producer return per ton during those years, which
includes proceeds from both free tonnage plus reserve pool raisins, has
varied from a low of $904.60 in 1993-94 to a high of $1,049 in 1996-97,
or 16 percent. Total producer prices for the 1998-99 and 1999-2000
seasons increased significantly due to back-to-back short crops during
those years. Producer prices dropped dramatically for the last three
seasons due to record-
[[Page 50292]]
size production, large carry-in inventories, and stagnant demand.
Natural Seedless Producer Prices
------------------------------------------------------------------------
Deliveries
Crop year (natural Producer prices
condition tons) (per ton)($)
------------------------------------------------------------------------
2002-03.......................... 388,010 \1\394.85
2001-02.......................... 377,328 650.94
2000-01.......................... 432,616 603.36
1999-2000........................ 299,910 1,211.25
1998-99.......................... 240,469 \2\1,290.00
1997-98.......................... 382,448 946.52
1996-97.......................... 272,063 1,049.20
1995-96.......................... 325,911 1,007.19
1994-95.......................... 378,427 928.27
1993-94.......................... 387,007 904.60
------------------------------------------------------------------------
\1\ Return-to-date, reserve pool still open.
\2\ No volume regulation.
There are essentially two broad markets for raisins--domestic and
export. In recent years, both export and domestic shipments have been
decreasing. Domestic shipments decreased from a high of 204,805 packed
tons during the 1990-91 crop year to a low of 156,325 packed tons in
1999-2000. In addition, exports decreased from 114,576 packed tons in
1991-92 to a low of 91,600 packed tons in the 1999-2000 crop year.
In addition, the per capita consumption of raisins has declined
from 2.07 pounds in 1988 to 1.48 pounds in 2002. This decrease is
consistent with the decrease in the per capita consumption of dried
fruits in general, which is due to the increasing availability of most
types of fresh fruit throughout the year.
While the overall demand for raisins has been decreasing (as
reflected in the decline in commercial shipments), production has been
increasing. Deliveries of NS dried raisins from producers to handlers
reached an all-time high of 432,616 tons in the 2000-01 crop year. This
large crop was preceded by two short crop years; deliveries were
240,469 tons in 1998-99 and 299,910 tons in 1999-2000. Deliveries for
the 2000-01 crop year soared to a record level because of increased
bearing acreage and yields. Deliveries for the 2001-02 crop year were
377,328 tons, and deliveries for the 2002-03 crop year were 388,010
tons. Deliveries through the week ending June 19, 2004, of the current
crop year were at 296,625 tons. Three crop years of high production and
a large 2001-02 carryin inventory have contributed to the industry's
burdensome supply of raisins.
The order permits the industry to exercise supply control
provisions, which allow for the establishment of free and reserve
percentages, and establishment of a reserve pool. One of the primary
purposes of establishing free and reserve percentages is to equilibrate
supply and demand. If raisin markets are over-supplied with product,
producer prices will decline.
Raisins are generally marketed at relatively lower price levels in
the more elastic export market than in the more inelastic domestic
market. This results in a larger volume of raisins being marketed and
enhances producer returns. In addition, this system allows the U.S.
raisin industry to be more competitive in export markets.
To assess the impact that volume control has on the prices
producers receive for their product, an econometric model has been
constructed. The model developed is for the purpose of estimating
nominal prices under a number of scenarios using the volume control
authority under the Federal marketing order. The price producers
receive for the harvest and delivery of their crop is largely
determined by the level of production and the volume of carryin
inventories. The Federal marketing order permits the industry to
exercise supply control provisions, which allow for the establishment
of reserve and free percentages for primary markets, and a reserve
pool. The establishment of reserve percentages impacts the production
that is marketed in the primary markets.
The reserve percentage limits what handlers can market as free
tonnage. Assuming the 30 percent reserve limits the total free tonnage
to 207,638 natural condition tons (.70 x 296,625 tons delivered through
June 19, 2004) and carryin is 129,345 natural condition tons, and
purchases from reserve total 66,740 natural condition tons (which
includes reserve raisins released through both 10 plus 10 offers plus
the offer under Sec. 989.67(j)), then the total free supply is
estimated at 403,723 natural condition tons. The econometric model
estimates prices to be $63 per ton higher than under an unregulated
scenario. This price increase is beneficial to all producers regardless
of size and enhances producers' total revenues in comparison to no
volume control. Establishing a reserve allows the industry to help
stabilize supplies in both domestic and export markets, while improving
returns to producers.
Free and reserve percentages are established by varietal type, and
usually 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, it has been determined that volume regulation is
warranted this season for only one of the nine raisin varietal types
defined under the order.
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. For NS raisins, with the exception of the
1998-99 crop year, 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. While the level of benefits of
this rulemaking are difficult to quantify, the stabilizing effects of
volume regulation impact small and large handlers positively by helping
them maintain and expand markets even though raisin supplies fluctuate
widely from season to season. Likewise, price
[[Page 50293]]
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 in past seasons. Thus, this action imposes no 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. The information collection 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 studied to
reduce or eliminate duplicate information collection burdens by
industry and public sector agencies. In addition, USDA has not
identified any relevant Federal rules that duplicate, overlap, or
conflict with this rule.
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.
An interim final rule concerning this action was published in the
Federal Register on April 22, 2004 (69 FR 21695). Copies of the rule
were mailed to all Committee members and alternates, the Raisin
Bargaining Association, handlers, and dehydrators. In addition, the
rule was made available through the Internet by the Office of the
Federal Register and USDA. That rule provided for a 60-day comment
period that ended on June 21, 2004. No comments were received.
A small business guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html.
Any questions about the compliance
guide should be sent to Jay Guerber at the previously mentioned address
in the FOR FURTHER INFORMATION CONTACT section.
After consideration of all relevant material presented, including
the information and recommendation submitted by the Committee and other
available information, 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 Part 989
Grapes, Marketing agreements, Raisins, Reporting and recordkeeping
requirements.
PART 989--RAISINS PRODUCED FROM GRAPES GROWN IN CALIFORNIA
Accordingly, the interim final rule amending 7 CFR part 989 which
was published at 69 FR 21695 on April 22, 2004, is adopted as a final
rule without change.
Dated: August 10, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-18613 Filed 8-13-04; 8:45 am]
BILLING CODE 3410-02-P