[Federal Register Volume 59, Number 170 (Friday, September 2, 1994)]
[Rules and Regulations]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-21713]
[[Page Unknown]]
[Federal Register: September 2, 1994]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 59, No. 170 / Friday, September 2, 1994 /
Rules and Regulations
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Parts 920 and 944
[Docket No. FV94-920-1FR]
Kiwifruit Grown in California and Imported Kiwifruit; Increase in
Minimum Size Requirements
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule increases the current minimum size
requirements for kiwifruit grown in California and for kiwifruit
imported into the United States that are shipped to the fresh market.
The minimum size requirement is increasing from Size 49, which is
defined as 60 pieces of fruit per 8-pound sample, to Size 45, which is
defined as 55 pieces of fruit per 8-pound sample. This rule will
prevent shipments of low-quality, undersized kiwifruit from having a
negative effect on the market.
EFFECTIVE DATE: This final rule becomes effective September 6, 1994.
FOR FURTHER INFORMATION CONTACT: Mark Hessel, Marketing Order
Administration Branch, AMS, USDA, P.O. Box 96456, Room 2526-S,
Washington, D.C. 20090-6456; telephone (202) 720-5127; or Rose Aguayo,
California Marketing Field Office, AMS, USDA, 2202 Monterey Street,
Suite 102 B, Fresno, California 93721; telephone (209) 487-5901.
SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing
Order No. 920 [7 CFR Part 920], as amended, 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.
This final rule is also issued under section 8e of the Act, which
provides that whenever certain specified commodities, including
kiwifruit, are regulated under a Federal marketing order, imports of
these commodities into the United States are prohibited unless they
meet the same or comparable grade, size, quality, and maturity
requirements as those in effect for the domestically produced
commodities.
The Department of Agriculture (Department) is issuing this final
rule in conformance with Executive Order 12866.
This final rule has been reviewed under Executive Order 12778,
Civil Justice Reform. This rule is not intended to have retroactive
effect. This final rule will not preempt any State or local laws,
regulations, or policies, unless they present an irreconcilable
conflict with this rule.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 608c(15)(A) of the
Act, any handler subject to an order may file with the Secretary a
petition stating that the order, any provision of the order, or any
obligation imposed in connection with the order is not in accordance
with law and request a modification of the order or to be exempted
therefrom. A handler is afforded the opportunity for a hearing on the
petition. After the hearing the Secretary would rule on the petition.
The Act provides that the district court of the United States in any
district in which the handler is an inhabitant, or has his or her
principal place of business, has jurisdiction in equity to review the
Secretary's ruling on the petition, provided a bill in equity is filed
not later than 20 days after date of the entry of the ruling.
There are no administrative procedures which must be exhausted
prior to any judicial challenge to the provisions of import regulations
issued under section 8e of the Act.
Pursuant to the requirements set forth in the Regulatory
Flexibility Act (RFA), the Administrator of the Agricultural Marketing
Service (AMS) has considered the economic impact of this final rule on
small entities.
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. Import regulations issued under
the Act are based on those established under Federal marketing orders.
There are approximately 65 handlers subject to regulation under the
order and about 600 producers of California kiwifruit. There are
approximately 75 importers of kiwifruit. Small agricultural service
firms, which include kiwifruit handlers and importers, have been
defined by the Small Business Administration [13 CFR 121.601] 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
$500,000. A majority of these handlers, importers, and producers may be
classified as small entities.
Under the terms of the marketing order, fresh market shipments of
California kiwifruit are required to be inspected and are subject to
grade, size, maturity, pack, and container requirements. Current
requirements include specifications that such shipments be at least
Size 49, grade at least KAC No. 1 quality, and contain a minimum of 6.5
percent soluble solids.
The production of California kiwifruit for the 1993 season was
approximately 12.3 million tray equivalents, compared to the 1992
season production of 13.3 million tray equivalents. This represents an
8 percent decrease in California kiwifruit production from 1992 to
1993.
The Kiwifruit Administrative Committee (committee), the agency
responsible for local administration of the marketing order, met on
February 10, 1994, and recommended increasing the minimum size
requirement from Size 49, which is defined as 60 pieces of fruit per 8-
pound sample, to Size 45, which is defined as 55 pieces of fruit per 8-
pound sample.
The marketing order authorizes under Sec. 920.52(a)(2) the
establishment of minimum size requirements. Sec. 920.302(a)(2) of the
rules and regulations outlines the minimum size requirements for fresh
shipments of California kiwifruit. Section 920.302(a)(4)(ii) includes a
table that specifies numerical size designations that are used to
determine kiwifruit sizes. These size designations are defined by
numerical counts, which establish the maximum number of fruit per 8-
pound sample for each of the established sizes. The size designation
table defines ten different sizes, beginning with Size 21 (the largest
size) and ending with Size 49 (the smallest size). The committee
recommended eliminating the Size 49 designation (60 pieces of fruit per
8-pound sample) and redefining the Size 45/46 designation (57 pieces of
fruit per 8-pound sample) as a Size 45 designation (55 pieces of fruit
per 8-pound sample).
The committee recommended increasing the minimum size requirement
because of the blending and packing of undersized fruit into containers
using the Size 49 designation. Current pack requirements specify that
kiwifruit designated as Size 45/46 or below must be packed within a \1/
4\ inch size tolerance. Undersized fruit (Size 49 kiwifruit near or
below the lower limit of the size tolerance) is often blended into the
Size 49 designation. It is a common practice throughout the industry to
blend and pack kiwifruit that could be designated as either undersized
fruit, Size 49, or Size 45/46 into a Size 49 container.
Blending occurs because adjoining size designations have size
tolerances that partially overlap and kiwifruit within either size
tolerance may be packed in either size designation. For example, the
current Size 49 designation and the current Size 45/46 designation have
only a 3-count difference per 8-pound sample. This amounts to only a
0.12 ounce difference per individual fruit. The equipment and time
needed to detect such a difference when packing individual fruit would
be cost prohibitive, so instead, handlers choose to blend sizes.
Blending has become more prevalent in recent years because a
greater percentage of kiwifruit is being packed in volume-fill or bulk
containers in which the fruit is packed ``loosely'' instead of in
containers with molded trays. Without the constraints of a molded tray,
there is more freedom to blend sizes.
The committee's intention in recommending this increase in the
minimum size requirement is to eliminate shipments of undersized fruit
that is blended into the Size 49 designation. This undersized kiwifruit
tends to soften more rapidly during storage than larger fruit and
becomes more susceptible to decay. This tendency for undersized fruit
to soften more rapidly than larger fruit becomes more pronounced once
it leaves a controlled environment and enters an uncontrolled one such
as a retail shelf. The end result is that the consumer is more likely
to encounter quality defects with undersized fruit then with larger
fruit.
Eliminating fresh shipments of undersized fruit by increasing the
minimum size requirement improves overall quality and increases
uniformity of pack size. The consumer benefits by being offered a
higher quality kiwifruit that ripens properly without prematurely
shriveling or softening. Also, grower returns are expected to increase
due to less repack loss, better kiwifruit movement, and higher prices
because of a better quality product.
There is also ample evidence to show that the market is adverse to
smaller sizes. The California Kiwifruit Commission (commission) funded
an independent survey titled ``Fresh Kiwifruit: Views from the Trade,''
in 1993. This survey indicated that 30% of the trade rejects small
sizes and that 86.1% of the trade prefers Size 42 (defined as 50 pieces
of fruit per 8-pound sample) or larger. Also, 92.1% of the
merchandisers and produce managers claim that their customers reject
small sizes.
An example of how consumers reject smaller sizes is when kiwifruit
is sold at the retail level out of 125 pound bulk bins. Consumers
initially pick out the largest and higher quality kiwifruit, and
displays are left with undersized and low quality kiwifruit that is
rejected by later consumers.
The committee's recommendation that the minimum size requirement be
set at Size 45 will not significantly lower the volume of kiwifruit
available in the fresh market. Although the committee reports that
12.1% of the California kiwifruit packout for the 1993/94 season was
designated as Size 49, most of this total could be blended into the
Size 45 designation because of the small difference between the two
size designations. The practice of blending sizes makes it difficult to
predict how much fruit will be eliminated by this rule, however, the
committee estimates that the total packout will be reduced by only 1%.
In addition, growers could adjust pruning, thinning, fertilizing, and
irrigation techniques so that a larger percentage of kiwifruit will
meet the higher size requirement.
There is general agreement in the industry for the need to
eliminate the packing of undersize fruit. Other alternatives have been
suggested to eliminate shipments of low quality, undersized fruit, but
would not adequately address the problem. One suggestion was to
eliminate the blending of sizes by eliminating the size tolerances.
This is not a realistic alternative, because as mentioned earlier, it
would be cost prohibitive and impossible to achieve using today's
packing methods.
Another suggestion was to measure size by passing a fruit through a
template with an opening large enough for an undersized fruit to fall
through, but too small for a kiwifruit that meets the minimum size
requirement to fall through. This template would be used to determine
whether a fruit was undersized. However, this alternative does not take
into consideration that kiwifruit grows in different shapes so that a
heavier fruit that is short and broad could fall through a template
while a lighter fruit that is long and narrow would not. Weight is
currently used to measure size and is the most accurate measure of a
kiwifruit's size.
Another alternative presented at the meeting was to tighten the
maturity requirements rather than the size standards so that
undersized, immature fruit would not be shipped. However, not all
undersized fruit is immature, but undersized fruit does tend to be more
susceptible to quality problems. Thus, this alternative would not fully
address the problem of blending in undersized fruit of inferior
quality.
Finally, another alternative presented at the meeting was to
establish Size 45 as the minimum size, but continue to define it as 57
pieces of fruit instead of 55 pieces of fruit per 8-pound sample as
recommended by the committee. However, because of the approximately
0.12 ounce difference between a Size 45 kiwifruit defined as 57 pieces
of fruit per 8-pound sample and a Size 49 kiwifruit defined as 60
pieces of fruit per 8-pound sample, this alternative would not go far
enough to prevent the blending of undersized fruit.
Section 8e of the Act provides that when certain domestically
produced commodities, including kiwifruit, are regulated under a
Federal marketing order, imports of that commodity must meet the same
or comparable grade, size, quality, and maturity requirements. Since
this rule increases the minimum size requirement under the domestic
handling regulations, a corresponding change to the import regulations
must also be implemented.
Minimum grade, size, quality, and maturity requirements for
kiwifruit imported into the United States are currently in effect under
Sec. 944.550 (7 CFR 944.550). The minimum size requirement is specified
in paragraph (a) of Sec. 944.550. This rule increases the minimum size
requirement for imported kiwifruit from Size 49, which is defined as 60
pieces of fruit per 8-pound sample, to Size 45, which is defined as 55
pieces of fruit per 8-pound sample.
The increase in the minimum size requirement for importers of
kiwifruit will also have a beneficial impact. This rule eliminates
quality problems associated with undersized imported kiwifruit as it
will for undersized domestic kiwifruit. In addition, the domestic
trade's preference for larger size kiwifruit applies to imported
kiwifruit as well as domestic kiwifruit. Thus, importers will benefit
by improving the overall quality of kiwifruit shipments and increasing
sales.
The proposed rule concerning this action was published in the June
29, 1994, Federal Register [59 FR 33451], with a 30-day comment period
ending July 29, 1994. Two comments were received, one in favor and the
other in opposition to the proposed rule.
The comment in favor of implementing the change set forth in the
proposed rule was submitted by the Kiwifruit Administrative Committee
and reiterated the arguments made in the proposed rule.
The second comment was submitted by a grower, Gregory W. Davis, who
opposed the proposed rule. Mr Davis commented that in his view the rule
is a volume control measure that forces growers to dump marketable
kiwifruit. This rule is not a volume control measure. Its intention is
to eliminate the blending of undersized fruit. In addition, growers
retain the option of adjusting their cultural practices so that a
larger percentage of kiwifruit will meet the new size requirement.
Also, the order does not force growers or handlers to dump fruit. The
following outlets are exempt from grade, size, maturity, quality,
inspection, and container requirements including: (1) Shipments of less
than 200 pounds per day; (2) roadside stands; (3) Certified Farmers
Markets; (4) charitable institutions; (5) relief agencies; and (6)
commercial processors.
Mr. Davis also commented that growers in his district (District 7)
are against increasing the minimum size requirement and that District
7, which includes Tulare and Inyo counties in Central California,
represents almost one-third of California kiwifruit production.
However, some District 7 committee members and alternates, who like all
members of the committee were elected by growers from their District,
voted in favor of increasing the minimum size requirement in the
various subcommittee and committee meetings that took place this past
year. A committee member from District 7 reported at the February 10,
1994, meeting that a majority of growers were against increasing the
minimum size requirement, but almost all growers were in favor of
eliminating the blending of undersize fruit. After a long, thorough,
and publicized debate, the committee determined that increasing the
minimum size to Size 45 from Size 49 is the best way to eliminate the
blending of undersize fruit.
Mr. Davis also commented that a redistricting scheduled for next
year might change the vote on the minimum size requirement. The
Department has yet to receive a formal recommendation from the
committee on this issue. It is premature to assume that any
redistricting will take place or that a newly seated committee would
vote any differently on a minimum size requirement. The present
committee was nominated by growers and appointed by the Secretary
according to marketing order procedures. If a redistricting plan is
recommended and approved, and if a new committee is selected, then that
committee may recommend revisions to the minimum size requirement.
Mr. Davis' comment further stated that since the recommendation was
made on February 10, 1994, he and other growers did not have sufficient
time to adjust their cultural practices so that a higher percentage of
the 1994 crop will meet the higher size requirement. However, Mr. Davis
indicates that he was present at the subcommittee meeting held in
Modesto, California on December 8, 1993, in which the subcommittee
initially recommended increasing the minimum size requirement. In
addition, the January 1994 bulletin of California Kiwifruit, which is
jointly produced by the commission and the committee, announced the
December 8, 1993, subcommittee's preliminary recommendation to increase
the minimum size requirement. This publication is mailed to all known
kiwifruit growers. Finally, other kiwifruit growers indicate that
cultural practices, such as thinning, are available during February or
later to increase kiwifruit size so that a larger percentage of
kiwifruit meet the new size requirement.
Mr. Davis' comment went on to question the wisdom of preventing
shipments of kiwifruit that he considers to be of good quality.
However, quality is a term that is often defined by changing consumers
preferences. The independent survey funded by the commission is an
attempt to identify current consumer preferences and clearly shows that
many consumers are adverse to smaller sizes. It is reasonable to
require kiwifruit shipments to meet customer preferences for larger
sizes. Otherwise, California kiwifruit will not be as marketable as
kiwifruit from international competitors who meet customer preferences.
Finally, Mr. Davis suggested that the committee lacked formal
research that shows Size 49 or smaller kiwifruit is not of good
quality. As mentioned earlier, the independent market survey does show
an overwhelming trade preference for sizes 42 or larger. Although no
formal research was specifically conducted on customer preference for
Size 49 kiwifruit or smaller kiwifruit, there is a tremendous amount of
knowledge and experience among growers about the marketing of
kiwifruit. It is the view of a majority of committee members, which is
made up of growers, that shipments of undersized kiwifruit have been
poorly received by consumers.
After thoroughly analyzing the comments received and other
available information, the Department has concluded that this final
rule is appropriate.
In accordance with section 8e of the Act, the United States Trade
Representative has concurred with the issuance of this final rule.
Based on the above, the Administrator of the AMS has determined
that this action will not have a significant economic impact on a
substantial number of small entities.
After consideration of all relevant matter presented, including the
information and recommendations 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.
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 this rule should be implemented
prior to the beginning of the shipping season in mid-September.
Further, handlers are aware of this rule, which was recommended at
public meetings. Also, a 30-day comment period was provided for in the
proposed rule.
List of Subjects
7 CFR Part 920
Kiwifruit, Marketing agreements.
7 CFR Part 944
Avocados, Food grades and standards, Grapefruit, Grapes, Imports,
Kiwifruit, Limes, Olives, Oranges.
For the reasons set forth above, 7 CFR Parts 920 and 944 are
amended as follows:
1. The authority citation for 7 CFR Parts 920 and 944 continues to
read as follows:
Authority: 7 U.S.C. 601-674.
PART 920--KIWIFRUIT GROWN IN CALIFORNIA
2. In Sec. 920.302, paragraphs (a)(2) and (a)(4)(ii) are revised to
read as follows:
Sec. 920.302 Grade, size, pack, and container regulations.
(a) * * *
(2) Size requirements. Such kiwifruit shall be at least a minimum
Size 45.
* * * * *
(4) * * *
(ii)(A) Kiwifruit packed in bags, volume fill or bulk containers
may not vary more than \1/2\-inch (12.7 mm) in diameter if Size 30 or
larger; not more than \3/8\-inch (9.5 mm) in diameter if Size 33, 36,
39, or 42; and not more than \1/4\-inch in diameter (6.4 mm) if Size
45. Not more than 10 percent, by count, of the containers in any lot
and not more than 5 percent, by count, of kiwifruit in any container
may fail to meet the requirements of this paragraph. The following
table specifies the numerical size designation to be used in packing
such containers as shown in Column 1, and the maximum number of fruit
per 8-pound sample as shown in Column 2.
------------------------------------------------------------------------
Column
2,
maximum
number
Column 1, numerical count size designation of fruit
per 8-
pound
sample
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21............................................................ 22
25............................................................ 27
27/28......................................................... 30
30............................................................ 32
33............................................................ 35
36............................................................ 40
39............................................................ 45
42............................................................ 50
45............................................................ 55
------------------------------------------------------------------------
(B) The average weight of all sample units in a lot must weigh at
least 8 pounds, but no sample unit may be more than 4 ounces less than
8 pounds.
* * * * *
PART 944--FRUITS; IMPORT REGULATIONS
3. In Sec. 944.550, paragraph (a) is revised to read as follows:
Sec. 944.550 Kiwifruit import regulation.
(a) Pursuant to section 8e of the Agricultural Marketing Agreement
Act of 1937, as amended, the importation into the United States of any
kiwifruit is prohibited unless such kiwifruit meets all the
requirements of a 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.'' Such fruit shall be at least Size 45, which means
there shall be a maximum of 55 pieces of fruit and the average weight
of all samples in a specific lot must weigh at least 8 pounds, provided
that no individual sample may be less than 7 pounds 12 ounces.
* * * * *
Dated: August 29, 1994.
Eric M. Forman,
Acting Director, Fruit and Vegetable Division.
[FR Doc. 94-21713 Filed 9-1-94; 8:45 am]
BILLING CODE 3410-02-P