[Federal Register: January 30, 2006 (Volume 71, Number 19)]
[Rules and Regulations]
[Page 4805-4808]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30ja06-2]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 989
[Docket No. FV05-989-610 REVIEW]
California Raisin Marketing Order; Section 610 Review
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Confirmation of regulations.
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SUMMARY: This action summarizes the results under the criteria
contained in section 610 of the Regulatory Flexibility Act (RFA), of an
Agricultural Marketing Service (AMS) review of Marketing Order No. 989,
regulating the handling of raisins produced from grapes grown in
California.
ADDRESSES: Interested persons may obtain a copy of the review. Requests
for copies should be sent to the Docket Clerk, Marketing Order
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400
Independence Avenue SW., STOP 0237, Washington, DC 20250-0237; Fax:
(202) 720-8938; or E-mail: moab.docketclerk@usda.gov.
FOR FURTHER INFORMATION CONTACT: Kurt Kimmel or Maureen Pello,
California Marketing Field Office, Marketing Order Administration
Branch, Fruit and Vegetable Programs, AMS, USDA, Fresno, California;
Telephone: (559) 487-5901; Fax: (559) 487-5906; E-mail:
Kurt.Kimmel@usda.gov or Maureen.Pello@usda.gov; 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; E-mail: George.Kelhart@usda.gov.
SUPPLEMENTARY INFORMATION: Marketing Order No. 989, as amended (7 CFR
part 989), regulates the handling of raisins produced from grapes grown
in California (order). The marketing order is effective under the
Agricultural Marketing Agreement Act of 1937 (Act), as amended (7
U.S.C. 601-674).
AMS published in the Federal Register (64 FR 8014; February 18,
1999), its plan to review certain regulations, including Marketing
Order No. 989, under criteria contained in section 610 of the RFA (5
U.S.C. 601-612). An updated plan was published in the Federal Register
on January 4, 2002 (67 FR 525) and on August 14, 2003 (68 FR 48574).
Accordingly, AMS published a notice of review and request for written
comments on the California raisin marketing order in the May 25, 2004,
issue of the Federal Register (69 FR 29672). The deadline for comments
ended July 23, 2004.
The review was undertaken to determine whether the California
raisin marketing order should be continued without change, amended, or
rescinded to minimize the impacts on small entities. In conducting this
review, AMS considered the following factors: (1) The continued need
for the marketing order; (2) the nature of complaints or comments
received from the public concerning the marketing order; (3) the
complexity of the marketing order; (4) the extent to which the
marketing order overlaps, duplicates, or conflicts with other Federal
rules, and, to the extent feasible, with State and local governmental
rules; and (5) the length of time since the marketing order has been
evaluated or the degree to which technology, economic conditions, or
other factors have changed in the area affected by the marketing order.
The order was initially promulgated in 1949. It has been amended
twelve times to meet the changing needs of the industry. The most
recent amendments occurred in 1989.
The order establishes the Raisin Administrative Committee
(Committee or RAC) as the administrative body charged with overseeing
program operations. Staff is hired to conduct the daily administration
of the program. The Committee consists of 47 members
[[Page 4806]]
and 47 alternate members. Thirty-five members represent producers, ten
represent handlers, one represents the cooperative bargaining
association, and one represents the public. Membership is further
allocated among producers representing the cooperative marketing
association, the cooperative bargaining association, and those not
affiliated with either cooperative (independents). The cooperative
marketing association and the cooperative bargaining association
nominate their representatives, while independent member
representatives are nominated at meetings and elected through a mail
balloting process.
The Committee recommends the implementation of regulatory actions
and activities under the marketing order and changes to the marketing
order when needed to further marketing order and industry objectives.
AMS approves these recommendations undertaken by the Committee before
they can be implemented.
These activities include volume control to help stabilize raisin
supplies and prices, and strengthen market conditions; various export
programs to help packers remain price competitive with foreign
producers and to maintain and expand these markets; quality control
with mandatory incoming and outgoing inspection to assure the condition
and quality of raisins delivered by producers to packers and sold by
packers into commercial channels; imported raisin quality also is
assured under a section 8e of the Act import regulation; research and
promotion activities to maintain and expand exports financed with
reserve pool proceeds; and reporting requirements used by the RAC to
obtain production, shipment, and other marketing information used by
the industry in making sound marketing decisions and in furthering
marketing order goals. Funds to administer the marketing order are
obtained from handler assessments and proceeds obtained from the sale
of reserve pool raisins.
Currently, there are approximately 4,500 producers and 20 handlers
of California raisins. The majority of these producers and seven
handlers may be classified as small entities. The regulations
implemented under the order are applied uniformly to small and large
entities, and are designed to benefit all industry entities regardless
of size.
Notice of 610 Review for California Raisins
A notice of review and request for comments regarding the
California raisin marketing order was published in the Federal Register
on May 25, 2004. During the comment period that ended on July 23, 2004,
five written comments were received. One comment was submitted by the
then Committee President, and four were submitted by raisin growers and
handlers. Two comments address the five factors under consideration by
AMS. No comments from non-industry representatives were received. All
comments were evaluated during the conduct of this review and are
discussed, where appropriate, later in this document.
The Continued Need for the Marketing Order
The marketing order has been used over the years in the areas of
volume control, quality control, research and promotion activities, and
the collection and dissemination of statistical information.
Volume control has helped stabilize supplies and prices, and
strengthen marketing conditions. Under the marketing order's volume
control provisions, packer raisin acquisitions are segregated into free
tonnage and reserve tonnage. Free tonnage raisins may be shipped to any
market. Reserve raisins are production in excess of free tonnage needs
(domestic markets) and must be pooled by handlers in a pool for later
sale by the Committee to authorized outlets. The RAC generally needs
several years to dispose of reserve pool raisins. Currently, the 2002-
03 and 2003-04 reserve pools are still open. The entire crop in 2004-05
was free tonnage so a reserve pool was not established for that crop
year.
Basically, there are two markets for California raisins, domestic
and export. The marketing order has helped the industry expand domestic
markets over the years. Moreover, it has promoted a dramatic expansion
of raisin exports. When the marketing order was implemented in 1949,
export markets were not viable outlets. Under the marketing order, the
industry has been able to develop and maintain export markets, in spite
of foreign competition. Export shipments have been an important source
of growth for the industry and the marketing order has provided a
foundation for this expansion. The Committee believes that it needs to
maintain export shipments to foster stable marketing conditions and
reasonable producer prices. The Committee further believes that the
marketing order will continue to be an important tool in achieving
these goals.
In the mid-1990s, domestic and export shipments began to drop.
Total shipments have increased in the past two years and currently are
in excess of 300,000 tons. The increase in shipments is mainly due to
an increase in domestic shipments. In 2004-05, domestic shipments were
in excess of 205,000 tons. This is the highest level of domestic
shipments since 1993. These shipment levels are reminiscent of levels
achieved during the early- and mid-1990's. Maintaining and continuing
this level of domestic shipments together with exports near the 100,000
tons per crop year level will be important to the future welfare of the
industry. The Committee believes that the marketing order can continue
to be used to maintain and increase these shipment levels.
Since 1949, total grower returns per ton have increased five-fold,
from less than $200 per ton to well over $1,000 per ton. Grower returns
have fluctuated in response to supply and demand conditions, but in
most seasons grower returns have been reasonable.
The field price for free tonnage reached a high of $1,425 per ton
for the 1999-2000 crop year. Average producer raisin prices as reported
by the National Agricultural Statistics Service during the 2000-01
through 2003-04 crop years were below cost of production levels due to
record high production. A 1998 cost of production study by the
University of California Cooperative Extension for a 120 acre raisin
vineyard using traditional growing and harvesting systems shows total
costs per ton with a yield of 2.3 tons at about $872 per ton. Lower
bearing acres and yields have resulted in a lower production of raisin
variety grapes and raisins, and producer prices began to improve in
2004-05.
In 2004-05, the free tonnage field price was set at $1,210 per ton.
This was the first time since 1999-2000, that the field price has been
above $1,000 per ton. For the 2005-06 crop year, a sliding scale for
the field price has been set at a minimum price of $1,210 per ton that
can rise as the quantity of raisins produced drops by 20,000 ton
increments below 400,000 tons. In addition, a similar sliding price for
the 2006-07 and 2007-08 crop years recently has been announced where
prices will range from $960 to $1,560 per ton. This future price
commitment is expected to help the financial position of producers,
help packers make marketing decisions and help the industry continue
the positive shipment results experienced in 2004-05 under the
marketing order.
With the marketing order as a support mechanism for the industry,
the situation in the raisin industry has improved since 2002. Producer
prices and revenues have increased, production and inventories have
[[Page 4807]]
decreased, and shipments have increased. Moreover, world production and
inventories have moderated. Even so, the industry has numerous
challenges. The most important of which may be developing demand for
younger consumers. Although domestic shipments have increased over the
last five crop years, this increase has not been sufficient to offset
the increase in population. The Committee believes that the marketing
order could be a significant tool in facilitating consumer interest and
expanding shipments in both domestic and export markets.
Quality control is as important today as it was when these
standards were initially established in 1955. The establishment of
minimum incoming and outgoing quality standards over the years has
helped improve the quality of product moving from the vineyard to
commercial market channels. Quality control has helped ensure that only
satisfactory product reaches the marketplace and has helped foster
customer satisfaction. This has helped the industry increase and
maintain demand for California raisins over the years in domestic and
export markets. Quality control also has helped the industry remain
competitive with foreign production in Turkey, Greece, The Republic of
South Africa, Australia, Chile, Argentina, and Mexico.
Research and promotion export activities also have helped the
industry remain competitive with foreign production in export markets
and have helped foster market stability in commercial marketing
channels.
In addition to the above, the Committee collects statistical
information from handlers on a routine basis. This information is
compiled by the Committee staff to produce statistical reports that are
used by the industry to make planting, harvesting, and sales decisions.
It is also used in short- and long-term planning by the Committee.
Based on the foregoing, AMS has determined that the order should be
continued, without change, at this time. While the industry has
considered changes to the order to improve volume control
implementation and overall marketing order operations to lessen the
chances of below cost of production producer returns, it has had
difficulty reaching a consensus on the issues. As part of AMS's
administrative responsibilities, AMS will continue its dialogue with
the industry on these matters in an effort to improve the marketing
order.
As mentioned earlier, AMS reviews industry recommendations and
programs for consistency with the regulatory authorities provided in
the order, the prevailing and prospective market situation, and the
impact upon small businesses. An assessment is also made as to whether
regulatory recommendations or programs are practical for those who
would be regulated, and whether the recommendations are consistent with
USDA policy.
AMS also routinely monitors the operations of this order, as does
the industry and Committee, to ensure that the regulations issued
address market and industry conditions, and that the regulations and
administrative procedures are appropriate for practices within the
industry. As noted earlier, a dialogue with the Committee on program
matters is continuing to help improve marketing order operations.
The Nature of Complaints or Comments From the Public Concerning the
Marketing Order
In its written comment, the then President of the Committee
provided background information about the industry and the marketing
order, as well as rationale for continuing the marketing order. The
comment addresses the AMS 610 review criteria, the various activities
and programs administered under the order, describes the benefits of
these activities, and expresses the belief that there is sound support
within the industry for continuation of the marketing order. This
comment also mentions that some factors in the industry believe that
the marketing order could be improved to better serve producers and
packers. The Committee has not yet finalized possible program
improvements. The comment also summarizes the evolution of the order
from its inception in 1949 to the present day. Some of the marketing
order's successes have been mentioned earlier.
One producer comment expressed support for the marketing order,
noting that the same fluctuations in supply exist today as when the
order was promulgated in 1949. This commenter stated that the use of
the order's volume control mechanism helps the industry maintain
orderly marketing conditions. However, the comment also refers to
compliance problems that the commenter believes have not been
adequately addressed by the Committee and USDA under the marketing
order. Another commenter also stated that volume control regulations
were being circumvented by handlers. With regard to compliance
problems, the Committee investigates and refers such matters to AMS.
AMS then reviews and evaluates such matters and recommends appropriate
enforcement action as soon as possible. USDA has and will continue to
take appropriate action on such compliance matters.
Another comment from a producer, a third-generation grower, felt
that the high production costs in recent years and low producer prices
in the early 2000's were attributable to the marketing order and raisin
handlers in the industry. Another producer, who is also a handler, felt
that the volume control provisions were inadequate to prevent the
recent (early 2000's), unprecedented low grower prices. As stated
earlier, the prices to growers over the next several years are expected
to be above estimated production costs. Much of the improvement in
industry conditions and producer prices is due to the reduced crops and
reductions in bearing raisin grape acreage. However, although difficult
to quantify, some of this improvement is due to the marketing order and
the activities authorized.
A producer of organic raisins commented that the marketing order
has not kept pace with the technological improvements in industry
practices, especially with regard to organic raisins. The commenter
also maintained that U.S markets are flooded with imported raisins, and
that the importers are not subject to as many marketing order
obligations as the domestic handlers. Further, the comment asserted
that RAC is controlled by packers (handlers) and that the marketing
order does not benefit producers.
The RAC has considered the views of the organic sector of the
industry, and has implemented reporting requirements with USDA approval
for the purpose of obtaining statistical information on the organic
segment of the industry. In addition, organic handlers also have the
opportunity to utilize an exemption from promotion assessments under
marketing orders pursuant to 7 CFR 900.700. While the organic sector
wants to be removed from the marketing order regulation, the
traditional raisin sector believes that both organic and traditionally
produced raisins compete with each other in marketing channels, and
both types of raisins should be subject to marketing order
requirements. This matter continues to be under discussion with the
industry.
Regarding the comment concerning the flood of imports on the U.S.
market, statistics from the U.S. Customs and Border Protection indicate
that imports make up a relatively small portion of the U.S. raisin
market. During the period 1999/2000 through 2003/2004 (August
[[Page 4808]]
1-July 31), U.S. imports averaged about 4 percent of U.S. production.
Finally, in response to the comments regarding the marketing order
benefiting handlers rather than producers, the goal of the program is
to improve the marketing conditions for both producers and handlers.
The marketing order is intended to allow the industry to solve
marketing and other problems that producers and handlers could not
handle individually. It helps the industry as a whole. The marketing
order is not geared toward meeting the needs of individual producers
and handlers.
The Complexity of the Marketing Order
The raisin marketing order is somewhat complex, reflecting the
complexity of the industry itself. AMS has attempted to ensure that the
regulations are no more complex than necessary to achieve desired
objectives consistent with industry operations. Implementing rules and
regulations under the order also reflect the marketing order
provisions. The Committee and its various subcommittees review the
regulations periodically and make recommendations for change. The
recommendations reflect and address the concerns of the raisin industry
and its complex nature. AMS has a continuing dialogue with the industry
and reviews Committee recommendations taking into account marketing
order complexity. Finally, Committee staff provides materials to
handlers explaining the programs and regulations, and makes every
effort to assist handlers when necessary.
The Extent to Which the Marketing Order Overlaps, Duplicates, or
Conflicts With Other Federal Rules, and to the Extent Feasible, With
State and Local Regulations
USDA has not identified any relevant Federal rules, or State and
local regulations that duplicate, overlap, or conflict with this
order's requirements. There is a companion State program that regulates
the raisin industry, but it does not duplicate, overlap, or conflict
with the Federal program. The State program, the California Raisin
Marketing Board, engages in marketing and promotion activities not
undertaken under the Federal order. Both programs work in concert to
assist the California raisin industry.
The Length of Time Since the Marketing Order Has Been Evaluated or the
Degree to Which Technology, Economic Conditions, or Other Factors Have
Changed in the Area Affected By the Marketing Order
AMS and the California raisin industry monitor the production and
marketing of raisins on a continuing basis. Changes in regulations are
implemented to reflect industry operating practices, and to solve
marketing problems. The goal of these evaluations is to ensure that the
order and the regulations issued under it fit the needs of the
industry, while remaining consistent with the Act and USDA policies.
Since its inception in 1949, the order has gone through numerous
changes. These changes were made, in part, because of changing economic
conditions affecting the production and handling of raisins. As noted
in the Committee's comment, it meets often each year and discussions
about the order and the various activities and regulations issued
thereunder are frequent and sometimes extensive. The Committee or its
subcommittees deliberate whether changes would improve the activities,
order, and regulations to reflect current industry operating practices,
and resolve current industry problems to the extent possible. In
addition to reviewing its regulations, the Committee reviews and
evaluates its programs on a continuing basis.
The numerous formal order amendments, the many changes to the rules
and regulations over the years, and the Committee's and AMS's
continuing review and adjustments to its programs, show that the order
is a dynamic, not static, program.
AMS will continue to work with and maintain a dialogue with the
California raisin industry in improving the program and in addressing
the concerns expressed by the industry.
Dated: January 23, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 06-821 Filed 1-27-06; 8:45 am]
BILLING CODE 3410-02-P