[Federal Register: September 8, 2004 (Volume 69, Number 173)]
[Rules and Regulations]
[Page 54193-54199]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08se04-1]
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Rules and Regulations
Federal Register
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[[Page 54193]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 920
[Docket No. FV04-920-1 FR]
Kiwifruit Grown in California; Relaxation of Pack and Container
Requirements
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule revises pack and container requirements currently
prescribed for California kiwifruit under the California kiwifruit
marketing order (order). The order regulates the handling of kiwifruit
grown in California and is administered locally by the Kiwifruit
Administrative Committee (committee). This rule adds a new size
designation to the allowable size designations for packs of kiwifruit;
revises the standard packaging requirements to require volume filled
containers of kiwifruit designated by weight to hold 19.8-pounds (9-
kilograms) net weight of kiwifruit, unless such containers hold less
than 15 pounds or more than 35 pounds net weight of kiwifruit; requires
the quantity statement to be indicated in terms of both ``count'' and
``size'' for all kiwifruit packed into cell compartments, cardboard
fillers, or molded trays; and exempts all varieties of kiwifruit from
the ``tightly packed'' standard pack requirement. This rule is expected
to help handlers compete more effectively in the marketplace, better
meet the needs of retailers, reduce handler packing costs, and to
improve handler and grower returns.
EFFECTIVE DATE: September 9, 2004.
FOR FURTHER INFORMATION CONTACT: Terry Vawter, 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 final rule is issued under Marketing
Order No. 920 as amended (7 CFR part 920), regulating the handling of
kiwifruit 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 (USDA) is issuing this rule in
conformance with Executive Order 12866.
This final 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 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. A
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 final rule revises pack and container requirements currently
prescribed for California kiwifruit under the order. This rule: (1)
Adds a new size designation to the allowable size designations for
packs of kiwifruit; (2) revises the standard packaging requirements to
require volume filled containers of kiwifruit designated by weight to
hold 19.8-pounds (9-kilograms) net weight of kiwifruit, unless such
containers hold less than 15 pounds or more than 35 pounds net weight
of kiwifruit; (3) requires the quantity statement to be indicated in
terms of both ``count'' and ``size'' for all kiwifruit packed into cell
compartments, cardboard fillers, or molded trays; and (4) exempts all
varieties of kiwifruit from the ``tightly packed'' standard pack
requirement.
The committee recommended these changes at its March 10, 2004
meeting. This rule is expected to help handlers compete more
effectively in the marketplace, better meet the needs of retailers, and
reduce packing costs. This rule is also expected to improve handler and
grower returns.
Additional Numerical Count Size Designation
Under the terms of the order, fresh market shipments of kiwifruit
grown in California are required to be inspected and meet grade, size,
maturity, pack, and container requirements.
Section 920.52 authorizes the establishment of pack requirements.
Section 920.302(a)(4) of the order's administrative rules and
regulations specifies pack requirements for fresh shipments of
California kiwifruit.
Section 920.302(a)(4)(ii)(B) provides that kiwifruit packed in
individual consumer packages, bags, volume filled, or bulk containers,
may not vary more than \1/2\-inch in diameter for size designations 30
or larger.
Section 920.302(a)(4)(iii) contains a table commonly referred to as
the ``Size Designation Chart.'' This chart specifies numerical count
size designations and the maximum number of fruit per 8-pound sample
for each numerical count size designation for fruit packed in
individual consumer packages, bags, volume filled, or bulk containers.
In 1985, the committee recommended and the USDA approved
establishment of the first numerical count size
[[Page 54194]]
designation chart by publishing a final rule in the Federal Register on
September 9, 1985 (50 FR 36567). This regulation established size
designation 49 defined as a maximum of 64 pieces of fruit in an 8-pound
sample, as the minimum size. It also established four other size
designations and required that kiwifruit packed in bags, volume filled,
or bulk containers be ``fairly uniform in size.'' At that time,
``fairly uniform in size'' meant that size designation 30 or larger
could not vary more than \1/2\ inch in diameter, size designations 33
and 36 could not vary more than \3/8\ of an inch, and size designations
39 and smaller could not vary more than \1/4\ inch in diameter.
Diameter was defined to mean the greatest dimension measured at right
angles to a line from stem to blossom end. Some tolerances were
provided.
Over the years, numerical count size designations have been added,
removed, and the maximum number of fruit per numerical count size
designation has been revised to accommodate new packaging and changing
market conditions. The committee recommended and the USDA approved
revisions to the size designation chart by publishing the following
interim and final rules in the Federal Register: August 16, 1993 (58 FR
43243); September 2, 1994 (59 FR 45617); September 3, 1998 (63 FR
46861); December 1, 1988 (53 FR 48513); July 29, 1999 (64 FR 41010);
October 29, 2001 (66 FR 1413); March 14, 2002 (67 FR 11396); and August
22, 2002 (67 FR 54327).
In recent years, many California growers have increased the size of
California kiwifruit through various cultural practices. During the
2003-2004 season, growers produced a crop with unusually large sizes.
Handlers experienced difficulty staying within the size variation
tolerance allowed for the largest size, size 20. Kiwifruit larger than
size 20 had to be blended into the size 20 designation, as there was no
larger size designation established for the 2003-04 season. This
blending required handlers to take special care to stay within the size
variation tolerance and reduced the uniformity of the pack size.
Handlers also incurred additional costs in meeting the requirements.
Thus, the committee, at its March 10, 2004, meeting, unanimously
recommended adding size designation 18, defined as a maximum of 25
pieces of fruit per 8-pound sample, to the size designation chart. This
change provides handlers with a total of eleven numerical count size
designations as follows:
Size Designation Chart
------------------------------------------------------------------------
Column 2
maximum number
Column 1 size designation of fruit per 8
pound sample
------------------------------------------------------------------------
18 *.................................................... 25
20...................................................... 27
23...................................................... 30
25...................................................... 32
27/28................................................... 35
30...................................................... 39
33...................................................... 43
36...................................................... 46
39...................................................... 49
42...................................................... 53
45...................................................... 55
------------------------------------------------------------------------
* New size designation.
Additionally, for clarification, the title ``Size Designation
Chart'' is added to the top of the chart.
The new size designation is expected to ease packing requirements,
by allowing handlers to stay within size variances for larger sized
fruit and is expected to improve handler and grower returns, as larger-
sized fruit commands higher prices. This action does not affect import
requirements.
Standardization of Packaging Requirement for Volume Filled Containers
Designated by Net Weight
Section 920.52(a)(3) of the order authorizes the establishment of
weight requirements for containers of California kiwifruit.
Section 920.302(a)(4) of the order's administrative rules and
regulations outlines pack requirements for fresh shipments of
California kiwifruit.
In a volume filled container, fairly uniform size kiwifruit are
loosely packed without cell compartments, cardboard fillers, or molded
trays. Handlers may ship volume filled containers marked with either
the appropriate count (number of pieces of fruit) or net weight (total
weight of pieces of fruit in the container). Handler shipments are
based upon the preference of the receiver.
In 1994, the committee unanimously recommended and USDA established
standard packaging for certain volume filled containers designated by
weight, as published in the Federal Register on October 25, 1994 (59 FR
53563). At that time, 52 percent of the total crop was packed into
volume filled containers. The percentage of the total crop packed into
volume filled containers increased to 85 percent during the 2001-02
season.
In the 2001-02 season, imports from the Northern hemisphere
(Greece, Italy, and France) totaled approximately 17 percent of the
U.S. market share. The majority of imported kiwifruit was shipped in
19.8-pound (9-kilogram) volume filled containers; whereas the order
limited California handlers to 22-pound (10-kilogram) net weight volume
filled containers. With the 22-pound provisions, handlers could not
meet buyer demands for other types of packaging.
In an effort to meet buyer demands for other types of packaging,
the standardized packaging requirement of 22-pounds (10-kilograms) net
weight for certain volume filled containers was suspended for the 2002-
2003 and 2003-2004 seasons. These suspensions were implemented by an
interim final rule published in the Federal Register on August 22, 2002
(67 FR 54327); a final rule published on November 21, 2002 (67 FR
76140); and another final rule published in the Federal Register on
July 28, 2003 (68 FR 44191). The suspension published in the Federal
Register on July 28, 2003 was in effect until July 31, 2004.
Additionally, the final rule published in the Federal Register on July
28, 2003 (68 FR 44191) removed a pack requirement in Sec.
920.302(a)(4)(iv) and paragraph (a)(4)(v) was redesignated as paragraph
(a)(4)(iv).
However, during the 2002-2003 and 2003-2004 seasons, since handlers
and retailers were not limited to a specific net weight for volume
filled containers designated by weight, some confusion appeared in the
marketplace. Without a specific net weight for volume filled
containers, more than one net weight was packed by handlers.
In an effort to determine the best means of ensuring more orderly
marketing, the committee conducted a survey of kiwifruit handlers and
growers during the 2003-2004 season. The survey results clearly showed
that the industry favored establishment of a standardized packaging
requirement for volume filled containers of kiwifruit designated by
weight to hold 19.8-pound (9-kilograms) net weight of kiwifruit, unless
such containers hold less than 15 pounds or more than 35 pounds net
weight of kiwifruit.
Accordingly, the committee, on March 10, 2004, unanimously
recommended revising the standard packaging requirements for volume
filled containers of kiwifruit designated by weight to hold 19.8-pounds
(9-kilograms) net weight of kiwifruit, unless such containers hold less
than 15 pounds or more than 35 pounds net weight of kiwifruit.
This recommended change is expected to allow the industry to
compete more effectively in the marketplace with its foreign
[[Page 54195]]
competition, allow continued packing of the new variety of kiwifruit in
14-pound containers, and may improve grower returns. This action does
not affect import requirements.
Container Marking Requirements
Section 920.52 authorizes the establishment of pack, and container
requirements for California kiwifruit.
Section 920.303 of the order's administrative rules and regulations
outlines specific container marking requirements for fresh shipments of
California kiwifruit.
Section 920.303(c)(1) provides that the quantity statement shall be
indicated in terms of count for kiwifruit packed in cell compartments,
cardboard fillers, or molded trays, and the contents shall conform to
the count.
Historically, the industry and buyers have associated count (number
of pieces of fruit) with fruit size designations (maximum number of
pieces of fruit in an 8-pound sample). Molded trays were originally
designed in the early 1980's to accommodate fruit of the corresponding
size from the numerical count size designation chart. For example,
count 36 trays (trays that held 36 pieces of fruit) would accommodate
size designation 36 fruit.
As previously mentioned, numerous changes have been made to the
size designation chart over the years. Other changes have included
removal of the minimum tray weight requirements, published in the
Federal Register on July 30, 2001 (66 FR 39270), and the addition of
the new molded tray inserts with smaller cup sizes. Currently, handlers
can pack five sizes of fruit (33, 36, 39, 42, and 45) into three tray
counts (33, 36, and 39), with the tray weighing as little as 5 pounds.
These differences may cause confusion in the marketplace, especially if
buyers assume that count is equivalent to size.
Thus, the committee, at its March 10, 2004 meeting, recommended
that both ``count'' and ``size'' be marked on containers with cell
compartments, cardboard fillers, or molded trays. Under this
recommendation, containers will be marked with the size of the fruit as
specified in the size designation chart and the number of pieces of
fruit in the box. For example, a tray marked with size designation 45
could hold 36 pieces of fruit. Retailers can clearly discern the number
of pieces of fruit packed into the container and the size of that
fruit. Of the eleven members present at that meeting, ten voted for
this change, and one voted against it. The one member who voted against
this recommendation believes that requiring both ``count'' and ``size''
to be marked on containers of California kiwifruit would impose
additional inspection requirements on California handlers. This member
believes that this recommendation would place the California handler at
a disadvantage in competing against imported kiwifruit, as importers do
not have to comply with container marking requirements.
In its deliberations, the committee discussed inspection
requirements. Committee members mentioned that currently inspectors
count the number of fruit in the container. Others mentioned that
requiring the quantity statement to be indicated in terms of both
``count'' and ``size'' for all kiwifruit packed into cell compartments,
cardboard fillers, or molded trays would require inspectors to also
verify the size markings. An analysis of inspection costs indicates
there would likely be an overall increase for the industry of 1.5
percent or about $2,529. Handlers in the industry contract with the
USDA Inspection Service to perform either a block or an in-line
inspection. Inspectors that perform in-line inspection inspect the
fruit at the time of packing; whereas, block inspections occur after
the fruit has been packed and prior to shipment. The additional costs
would be incurred by handlers who use the block inspection method for
their initial inspections, and those handlers who have fruit
reinspected prior to shipment. The block inspection method is used for
13 percent of initial inspections and for all reinspections. In recent
seasons, in-line inspections accounted for 87 percent of all initial
inspections. Reinspections are required if fruit is restyled or
repacked.
The committee believes that marking both ``count'' and ``size'' on
containers eliminates possible confusion in the marketplace. This
action does not affect import requirements.
Standard Pack ``Tightly Packed'' Requirement
Section 920.52(a)(2) of the order authorizes the establishment of
grade standards.
Section 920.302(a)(1) of the order's administrative rules and
regulations states the minimum grade shall be at least KAC No. 1
quality.
Section 920.302(b) defines the term KAC No. 1 quality as kiwifruit
that meets the requirements of U.S. No. 1 grade as defined in 7 CFR
51.2335 through 51.2340 of the United States Standards for Grades of
Kiwifruit (standards), except that the kiwifruit shall be ``not badly
misshapen,'' and an additional 7 percent tolerance is provided for
``badly misshapen.'' In addition, the ``Hort16A'' variety of kiwifruit
is exempt from the ``tightly packed'' standard as defined in Sec.
51.2338(a) of the standards.
The standards define standard pack requirements, require containers
to be well filled, and require the contents to be tightly packed, but
not excessively or unnecessarily bruised by overfilling or oversizing
for fruit packed in cell compartments, cardboard fillers, or molded
trays. This is commonly referred to in the industry as the ``tight-
fill'' requirement.
In 1990, these ``tight-fill'' provisions were established in Sec.
920.302(b) to ensure that ``Hayward'' variety kiwifruit (the
predominant kiwifruit variety produced in the production area) fit
tightly into the tray-liner cups, as published in the Federal Register
on October 18, 1990 (55 FR 42179). Some kiwifruit handlers believe that
kiwifruit packed tightly into the cups of the tray-liners are less
subject to movement, and, therefore, less damage.
A new kiwifruit cultivar, the Actinidia chinensis ``Hort16A,''
commonly referred to as ``gold'' kiwifruit, was recently introduced in
California and is being sold commercially. The ``Hort16A'' variety is
currently packed into a special shallow molded tray with a notch for
the beak, which minimizes damage to the fruit. This variety, when
packed in the shallow tray, may not meet the ``tightly packed''
requirement for standard pack under the standards. Therefore, on March
12, 2003, the committee unanimously recommended, and USDA subsequently
approved, an exemption for all ``gold'' kiwifruit varieties from the
order's ``tightly filled'' requirement. This exemption was implemented
through a final rule published in the Federal Register on July 28, 2003
(68 FR 44191).
During the last several years, the value of the ``tight-fill''
requirement has decreased due to manufacturer changes in the shape and
cuts of the molded trays.
Thus, the committee, at its March 10, 2004, meeting, recommended
eliminating the ``tight-fill'' requirement. The majority of the
committee members agreed that the tight-fill requirement is no longer
necessary, as they believe handlers would continue to pack fruit that
tightly fits into the cup of the molded tray to prevent damage to the
fruit and to meet buyer demands for uniformly-sized kiwifruit packs. Of
the eleven members present, ten voted for this change. The one member
voting against this recommendation preferred keeping the ``tight-fill''
requirement, because he believes that handlers would be disadvantaged
in the market place by
[[Page 54196]]
loose packs. The committee discussed leaving the ``tight-fill''
requirement in place, but concluded that elimination of the ``tight-
fill'' pack requirement would relax handler pack and inspection
requirements, and increase handler and grower returns. This action does
not affect import requirements.
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 the 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 45 handlers of California kiwifruit subject
to regulation under the marketing order and approximately 270 growers
in the production area. Small agricultural service firms are defined by
the Small Business Administration (13 CFR 121.201) as those whose
annual receipts are less than $5,000,000, and small agricultural
producers are defined as those whose annual receipts are less than
$750,000. None of the 45 handlers subject to regulation have annual
kiwifruit sales of at least $5,000,000. In addition, six growers
subject to regulation have annual sales exceeding $750,000. Therefore,
a majority of the kiwifruit handlers and growers may be classified as
small entities.
This rule revises pack requirements prescribed under the California
kiwifruit order. This rule: (1) Adds a new size designation to the
allowable size designations for packs of kiwifruit; (2) revises the
standard packaging requirements to require volume filled containers of
kiwifruit designated by weight to hold 19.8-pounds (9-kilograms) net
weight of kiwifruit, unless such containers hold less than 15 pounds or
more than 35 pounds net weight of kiwifruit; (3) requires the quantity
statement to be indicated in terms of ``count'' and ``size'' for
kiwifruit packed in cell compartments, cardboard fillers, or molded
trays; and (4) exempts all varieties of kiwifruit from the ``tightly
packed'' standard pack requirement. The committee recommended these
changes at its March 10, 2004, meeting. These changes are expected to
help handlers compete more effectively in the marketplace, better meet
the needs of retailers, and to improve grower returns.
Authority for these actions is provided in Sec. 920.52 of the
order.
Additional Numerical Count Size Designation
Under the terms of the order, fresh market shipments of kiwifruit
grown in California are required to be inspected and meet grade, size,
maturity, pack, and container requirements.
Section 920.302(a)(4) of the order's administrative rules and
regulations specifies pack requirements for fresh shipments of
California kiwifruit.
Section 920.302(a)(4)(ii)(B) provides that kiwifruit packed in
individual consumer packages, bags, volume fill, or bulk containers,
may not vary more than \1/2\-inch in diameter for size designations 30
or larger.
Section 920.302(a)(4)(iii) contains a table commonly referred to as
the ``Size Designation Chart.'' This chart specifies numerical count
size designations and the maximum number of fruit per 8-pound sample
for each numerical count size designation for fruit packed in
individual consumer packages, bags, volume filled, or bulk containers.
In 1985, the committee recommended and the USDA approved
establishment of the first numerical count size designations by
publishing a final rule in the Federal Register on September 9, 1985
(50 FR 36567). This regulation established size designation 49 defined
as a maximum of 64 pieces of fruit in an 8-pound sample, as the minimum
size. It also established four other size designations and required
that kiwifruit packed in bags, volume filled, or bulk containers be
``fairly uniform in size.'' At that time, ``fairly uniform in size''
meant that size designation 30 or larger could not vary more than \1/2\
inch in diameter, size designations 33 and 36 could not vary more than
\3/8\ of an inch, and size designations 39 and smaller could not vary
more than \1/4\ inch in diameter. ``Diameter'' was defined to mean the
greatest dimension measured at right angles to a line from stem to
blossom end; with some tolerances provided.
Over the years, numerical count size designations have been added,
deleted, and the maximum number of fruit per numerical count size
designation has been revised to accommodate new packaging and changing
market conditions. The committee recommended and the USDA approved
revisions to the size designation chart by publishing the following
interim and final rules in the Federal Register: August 16, 1993 (58 FR
43243); September 2, 1994 (59 FR 45617); September 3, 1998 (63 FR
46861); December 1, 1988 (53 FR 48513); July 29, 1999 (64 FR 41010);
October 29, 2001 (66 FR 1413); March 14, 2002 (67 FR 11396); and August
22, 2002 (67 FR 54327).
In recent years, many California growers have increased the size of
California kiwifruit through various cultural practices. During the
2003-2004 season, growers produced a crop with unusually large sizes.
Handlers experienced difficulty staying within the size variation
tolerance allowed for the largest size, size designation 20. Kiwifruit
larger than size 20 had to be blended into the size 20 designation, as
there was no larger size designation established for the 2003-04
season. This blending requires handlers to take special care to stay
within the size variation tolerance and reduces the uniformity of the
pack size.
Thus, the committee, at its March 10, 2004, meeting, unanimously
recommended adding size designation 18, defined as a maximum of 25
pieces of fruit per 8-pound sample, to the size designation chart. This
change provides handlers with a total of eleven numerical count size
designations as follows:
Size Designation Chart
------------------------------------------------------------------------
Column 2
maximum number
Column 1 size designation of fruit per 8
pound sample
------------------------------------------------------------------------
18 *.................................................... 25
20...................................................... 27
23...................................................... 30
25...................................................... 32
27/28................................................... 35
30...................................................... 39
33...................................................... 43
36...................................................... 46
39...................................................... 49
42...................................................... 53
45...................................................... 55
------------------------------------------------------------------------
* New size designation.
Additionally, for clarification, the title ``Size Designation
Chart'' will be added to the top of the chart.
The committee discussed alternatives to this change including not
adding size 18 to the order's administrative rules and regulations, but
concluded that this change provides an additional pack option to
handlers and might help increase handler and grower returns. Almost 10
percent (over 4,000 tray equivalents) of the fruit packed as size 20 as
of March 31, 2004, could have been packed as the new proposed size
[[Page 54197]]
18. Packing 4,000 tray equivalents (te) as size 18 could have increased
grower returns approximately 5 cents per pound more than size 20
kiwifruit (4000 te x 7 pounds/te equals 28,000 pounds x $.05 FOB per
pound equals $1,400). This change does not affect import requirements.
Standardization of Packaging Requirement for Volume Filled Containers
Designated by Weight
Section 920.302(a)(4) of the order's administrative rules and
regulations outlines pack requirements for fresh shipments of
California kiwifruit.
In a volume filled container, fairly uniform size kiwifruit are
loosely packed without cell compartments, cardboard fillers, or molded
trays. Handlers may ship volume filled containers marked by either the
appropriate count (number of pieces of fruit) or net weight (total
weight of pieces of fruit in the container). Handler shipments are
based upon the preference of the receiver.
In 1994, the committee unanimously recommended and USDA established
standard packaging for certain volume filled containers designated by
weight, as published in the Federal Register on October 25, 1994 (59 FR
53563). At that time, 52 percent of the total crop was packed into
volume filled containers. The percentage of the total crop packed into
volume filled containers increased to 85 percent during the 2001-02
season.
In 2001-02, imports from the Northern Hemisphere (Greece, Italy,
and France) totaled approximately 17 percent of the U.S. market share.
The majority of imported kiwifruit was shipped in 19.8-pound (9-
kilogram) volume filled containers; whereas the order limited
California handlers to 22-pound (10-kilogram) net weight volume filled
containers. With the 22-pound provisions, handlers could not meet buyer
demands for other types of packaging.
In an effort to meet buyer demands for other types of packaging,
the standardized packaging requirement of 22-pounds (10-kilograms) net
weight for certain volume filled containers was suspended for the 2002-
2003 and 2003-2004 seasons. These suspensions were implemented by an
interim final rule published in the Federal Register on August 22, 2002
(67 FR 54327); a final rule published on November 21, 2002 (67 FR
76140); and another final rule published in the Federal Register on
July 28, 2003 (68 FR 44191). The suspension published in the Federal
Register on July 28, 2003, was in effect until July 31, 2004.
Additionally, the final rule published in the Federal Register on July
28, 2003 (68 FR 44191) removed a pack requirement in Sec. 920.302
(a)(4)(iv) and paragraph (a)(4)(v) was redesignated as paragraph
(a)(4)(iv). The provisions removed required containers to hold a
quantity of kiwifruit equal to 3 times the size designation marked on
the container. For example, if a container was marked as ``size 33,''
the container had to hold 99 pieces of fruit.
However, during the 2002-2003 and 2003-2004 seasons, since handlers
were not limited to a specified net weight for volume fill containers,
some confusion appeared in the market place. Without a specific net
weight for volume filled containers, more than one net weight was
packed by handlers.
In an effort to determine the best means of ensuring more orderly
marketing, the committee conducted a survey of kiwifruit handlers and
growers during the 2003-2004 season. The survey results clearly showed
that the industry favored establishment of a standardized packaging
requirement for volume filled containers of kiwifruit designated by
weight of 19.8-pound (9-kilograms) net weight of kiwifruit, unless such
containers hold less than 15 pounds or more than 35 pounds net weight
of kiwifruit.
Thus, the committee, on March 10, 2004, unanimously recommended
revising the standard packaging requirements for volume filled
containers of kiwifruit designated by weight to hold 19.8-pounds (9-
kilograms) net weight of kiwifruit, unless such containers hold less
than 15 pounds or more than 35 pounds net weight of kiwifruit.
The committee discussed alternatives to the recommended change,
including removing the standardized volume fill net weight requirement
from the order's administrative rules and regulations but did not adopt
this alternative, as it believes that a standardized volume fill is
necessary to achieve orderly marketing of California kiwifruit.
The committee also discussed establishing a standard packing
requirement that would require volume filled containers of kiwifruit
designated by weight to hold 19.8-pounds (9 kilograms) net weight of
kiwifruit, unless such containers hold less than 10-pounds or more than
35-pounds net weight of kiwifruit. The committee did not adopt this
suggestion, as it believes that it is important to accommodate the
``Hort16A'' variety which is packed in a 14-pound volume filled
container.
Finally, the committee discussed reinstating the 22-pound (10-
kilogram) net weight standard packaging requirement for volume filled
containers. The committee calculated that utilizing a 19.8-pound (9-
kilo) net weight standard volume fill pack would increase the cost of
packaging by 10 percent, generate approximately 10 percent more total
volume filled boxes than the 22-pound standard; would increase the
grower return by 20 percent, thereby offsetting the 10 percent increase
in packaging costs; and would better serve the industry.
This recommended change will allow the industry to compete more
effectively in the market place with its foreign competition, to
continue packing the new variety of kiwifruit in 14-pound containers,
and is expected to improve grower returns. This change does not affect
import requirements.
Container Marking Requirements
Section 920.303 of the order's administrative rules and regulations
outlines specific container marking requirements for fresh shipments of
California kiwifruit.
Section 920.303(c)(1) provides that the quantity shall be indicated
in terms of count for kiwifruit packed in cell compartments, cardboard
fillers, or molded trays, and the contents shall conform to the count.
Historically, the industry and buyers have associated count (number
of pieces of fruit) with fruit size designations (maximum number of
pieces of fruit in an 8-pound sample). Molded trays were originally
designed in the early 1980's to accommodate fruit of the corresponding
size from the numerical count size designation chart. For example,
count 36 trays (trays that held 36 pieces of fruit) would accommodate
size designation 36 fruit.
As previously mentioned, numerous changes have been made to the
size designation chart over the years. Other changes have included
removal of the minimum tray weight requirements (66 FR 39270; July 30,
2001), and the addition of the new molded tray inserts with smaller cup
sizes. Currently, handlers can pack five sizes of fruit (33, 36, 39,
42, and 45) into three tray counts (33, 36, and 39), with the tray
weighing as little as 5 pounds. These differences may cause confusion
in the market place, especially if buyers assume that count is
equivalent to size.
Thus, committee at its March 10, 2004, meeting recommended that
both ``count'' and ``size'' be marked on containers with cell
compartments, cardboard fillers, or molded trays. The committee
discussed several alternatives to this change. The first alternative
considered was to reinstitute tray weights. The committee felt this
[[Page 54198]]
requirement would be too restrictive as it would dictate what size
fruit had to be packed into a specific tray and that this might result
in handlers having to repack kiwifruit that did not meet established
minimum tray weight requirements. They were concerned that
reinstituting minimum tray weights might result in increased handler
costs.
The second alternative discussed by the committee was to regulate
the size of the molded cup. However, the committee determined that
regulating the size of the molded cup would not be feasible at this
time and could result in higher packing costs.
Finally, the committee discussed not changing the container marking
requirements to include both ``count'' and ``size'' for kiwifruit
packed in cell compartments, cardboard fillers, or molded trays.
However, the committee agreed that it was important to specify both
``count'' and ``size'' to ensure that fruit size was clearly specified.
Under this recommendation, containers will be marked with the size of
the fruit as specified in the size designation chart and the number of
pieces of fruit in the box. For example, a tray marked with size
designation 45 and could hold 36 pieces of fruit. Retailers will be
able to clearly discern the number of pieces of fruit packed into the
container and the size of that fruit. Of the eleven members present,
ten voted for this change. The one member voting against this
recommendation believes that requiring both ``count'' and ``size'' to
be marked on containers of California kiwifruit would result in
additional inspection requirements and increased inspection costs for
California handlers. This member believes that this recommendation
would place California handlers at a disadvantage in competing against
imported kiwifruit, as importers do not have to comply with container
marking requirements.
In its deliberations, the committee discussed inspection
requirements. Committee members mentioned that currently inspectors
count the number of fruit in the container. Others mentioned that
requiring the quantity statement to be indicated in terms of both
``count'' and ``size'' for all kiwifruit packed into cell compartments,
cardboard fillers, or molded trays would require inspectors to also
verify the size markings.
An analysis of inspection costs indicates that there would likely
be an overall increase for the industry of 1.5 percent or about $2,529.
Handlers in the industry contract with the USDA Inspection Service to
perform either a block or an in-line inspection. Inspectors that
perform in-line inspection inspect the fruit at the time of packing,
whereas, block inspections occur after the fruit has been packed, just
prior to shipment. The additional costs would be incurred by handlers
who use the block inspection method for their initial inspections, and
those handlers who have fruit reinspected prior to shipment. The block
inspection method is used for 13 percent of initial inspections and for
all reinspections. In recent seasons, in-line inspections accounted for
87 percent of all initial inspections. Reinspections are required if
fruit is restyled or repacked.
Additionally, the committee mentioned that the recommended change
does not mandate that the ``count'' and the ``size'' be the same, as a
tray marked with size designation 45 could still hold count 36 fruit
and still weigh as little as 5 pounds.
This change is expected to eliminate any confusion in the
marketplace and does not affect import requirements.
Standard Pack ``Tightly Packed'' Requirement
Section 920.302(a)(1) of the order's administrative rules and
regulations states the minimum grade shall be at least KAC No. 1
quality.
Section 920.302(b) defines the term KAC No. 1 quality as kiwifruit
that meets the requirements of U.S. No. 1 grade as defined in 7 CFR
51.2335 through 51.2340 of the standards, except that the kiwifruit
shall be ``not badly misshapen'' and an additional 7 percent tolerance
is provided for badly misshapen fruit and except that the ``Hort16A''
variety of kiwifruit is exempt from the ``tightly packed'' standard as
defined in Sec. 51.2338(a) of the standards.
The standards define standard pack requirements, require containers
to be well filled, and require the contents to be tightly packed, but
not excessively or unnecessarily bruised by overfilling or oversizing
for fruit packed in cell compartments, cardboard fillers, or molded
trays. This is commonly referred to in the industry as the ``tight-
fill'' requirement.
These ``tight-fill'' provisions were established under the order to
ensure that the ``Hayward'' variety (the predominant kiwifruit variety
produced in the production area) fits tightly into the tray-liner cups
(55 FR 42179, October 18, 1990). Some kiwifruit handlers believe that
kiwifruit packed tightly into the cups of the tray-liners are less
subject to movement and therefore less damage.
A new kiwifruit cultivar, the Actinidia chinensis ``Hort16A,''
commonly referred to as ``gold'' kiwifruit, was recently introduced in
California and is being harvested and sold commercially. To minimize
damage, the ``Hort16A'' variety is packed into a special shallow molded
tray with a notch for the beak. The ``Hort16A'' kiwifruit, when packed
in this shallow tray, may not meet the ``tightly packed'' requirement
for standard pack under the standards. Therefore, on March 12, 2003,
the committee unanimously recommended an exemption for all ``gold''
kiwifruit varieties from the order's ``tightly packed'' requirement.
This recommendation was implemented by USDA through a final rule
published in the Federal Register on July 28, 2003 (68 FR 44191).
During the last several years, the value of the ``tight-fill''
requirement has decreased due to manufacturer changes in the shape and
cuts of the molded trays.
Thus, the committee, at its March 10, 2004, meeting, recommended
that the ``tight-fill'' requirement be eliminated. The majority of the
committee members agreed that the tight-fill requirement is no longer
necessary, as they believe handlers would continue to pack fruit that
is tightly fit into the cup of the molded tray to prevent damage to the
fruit and to meet buyer demands for uniform sized kiwifruit packs. Of
the eleven members present, ten voted for this change. The one member
voting against this recommendation preferred keeping the ``tight-fill''
requirement, because he believes that handlers would be disadvantaged
in the market place by loose packs.
The committee discussed leaving the ``tight-fill'' requirement in
place, but concluded that handlers would continue to pack fruit that is
tightly fit into the cup of the molded tray to prevent damage to the
fruit and to meet buyer demands for uniform sized kiwifruit packs
without the ``tight-fill'' pack requirement. This revision relaxes
handler pack and inspection requirements, and may increase handler and
grower returns. This revision does not impact import regulations, as
pack and container requirements are not regulated under import
regulations.
This final rule relaxes pack and container requirements under the
kiwifruit order. Accordingly, these actions will not impose any
additional reporting or recordkeeping requirements on either small or
large kiwifruit handlers. As with all Federal marketing order programs,
reports and forms are periodically reviewed to reduce information
requirements and duplication by industry and public sectors.
[[Page 54199]]
As noted in the initial regulatory flexibility analysis, USDA has
not identified any relevant Federal rules that duplicate, overlap, or
conflict with this proposed rule. However, as previously stated,
California kiwifruit must meet the ``tight-fill'' requirements, as
specified in the standards (7 CFR 51.2335 through 51.2340) issued under
the Agricultural Marketing Act of 1946 (7 U.S.C. 1621 through 1627).
In addition, the committee's meeting was widely publicized
throughout the kiwifruit industry and all interested persons were
invited to attend the meeting and participate in committee
deliberations on all issues. Like all committee meetings, the March 12,
2003, meeting, was a public meeting and all entities, both large and
small, were able to express their views on these issues. Finally,
interested persons were invited to submit information on the regulatory
and informational impacts of this action on small businesses, as
requested in the proposed rule.
A proposed rule concerning this action was published in the Federal
Register on July 28, 2004 (69 FR 44975). Copies of the rule were
provided to all committee members and kiwifruit handlers. The rule was
also made available through the Internet by USDA and the Office of the
Federal Register. A 15-day comment period, which ended on August 12,
2004, was provided to allow interested persons to respond to the
proposal. No comments were received; and, thus, no changes will be made
to the rule as proposed.
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 matters presented, including
the information and recommendation of 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.
It is further found that good cause exists for not postponing the
effective date of this rule until 30 days after publication in the
Federal Register (5 U.S.C. 553) because shipments of 2004 crop
kiwifruit are expected to begin in early September and these changes
should be effective by that time. Moreover, prompt implementation will
provide handlers time to plan accordingly.
List of Subjects in 7 CFR Part 920
Kiwifruit, Marketing agreements, Reporting and recordkeeping
requirements.
0
For the reasons set forth in the preamble, 7 CFR part 920 is amended as
follows:
PART 920--KIWIFRUIT GROWN IN CALIFORNIA
0
1. The authority citation for 7 CFR part 920 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
Sec. 920.302 [Amended]
0
2. In Sec. 920.302, paragraphs (a)(4)(iii), (a)(4)(iv), and (b) are
revised to read as follows:
Sec. 920.302 Grade, size, pack, and container regulations.
(a) * * *
(4) * * *
(iii) When kiwifruit is packed in individual consumer packages,
bags, volume fill or bulk containers, the following table specifying
the size designation and maximum number of fruit per 8-pound sample is
to be used:
Size Designation Chart
------------------------------------------------------------------------
Column 2
maximum number
Column 1 size designation of fruit per 8
pound sample
------------------------------------------------------------------------
18...................................................... 25
20...................................................... 27
23...................................................... 30
25...................................................... 32
27/28................................................... 35
30...................................................... 39
33...................................................... 43
36...................................................... 46
39...................................................... 49
42...................................................... 53
45...................................................... 55
------------------------------------------------------------------------
(iv) All volume fill containers of kiwifruit designated by weight
shall hold 19.8-pounds (9-kilograms) net weight of kiwifruit unless
such containers hold less than 15 pounds or more than 35 pounds net
weight of kiwifruit.
(b) Definitions. The term KAC No. 1 quality means kiwifruit that
meets the requirements of the U.S. No. 1 grade as defined in the United
States Standards for Grades of Kiwifruit (7 CFR 51.2335 through
51.2340) except that the kiwifruit shall be ``not badly misshapen,''
and an additional tolerance of 7 percent is provided for kiwifruit that
is ``badly misshapen,'' and except that all varieties of kiwifruit are
exempt from the ``tightly packed'' standard as defined in Sec.
51.2338(a) of the U.S. Standards for Grades of Kiwifruit. The terms
fairly uniform in size and diameter mean the same as defined in the
U.S. Standards for Grades of Kiwifruit.
* * * * *
0
3. In Sec. 920.303, paragraph (c)(1) is revised to read as follows:
Sec. 920.303 Container marking regulations.
* * * * *
(c) * * *
(1) The quantity shall be indicated in terms of count and size for
kiwifruit packed in cell compartments, cardboard fillers, or molded
trays, and the contents shall conform to the count.
* * * * *
Dated: September 2, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-20415 Filed 9-7-04; 8:45 am]
BILLING CODE 3410-02-P