[Federal Register Volume 59, Number 207 (Thursday, October 27, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-26638]
Federal Register / Vol. 59, No. 207 / Thursday, October 27, 1994 /
[[Page Unknown]]
[Federal Register: October 27, 1994]
VOL. 59, NO. 207
Thursday, October 27, 1994
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 989
[Docket No. FV94-989-4FR]
Raisins Produced From Grapes Grown in California; Temporary
Suspension of Certain Reserve Tonnage Pricing Provisions
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: This final rule temporarily suspends a sentence in
Sec. 989.67(j) of the California raisin marketing order dealing with
the pricing of reserve raisins offered to handlers for free use. The
industry is faced with a large supply of Zante Currant raisins. The
suspension will only apply to 1994-95 reserve Zante Currants so that
the value of a portion of the free tonnage inventory held by handlers
on July 31, 1994, can be adjusted downward toward current market price
levels. This adjustment is necessary to help the industry become price
competitive and to aid it in marketing Zante Currants. This action was
unanimously recommended by the Raisin Administrative Committee
(Committee), which is responsible for local administration of the
order.
EFFECTIVE DATE: October 27, 1994 through July 31, 1995.
FOR FURTHER INFORMATION CONTACT: Richard P. Van Diest, Marketing
Specialist, California Marketing Field Office, Fruit and Vegetable
Division, AMS, USDA, 2202 Monterey Street, Suite 102B, Fresno,
California 93721; telephone: (209) 487-5901, or FAX (209) 487-5906; or
Mark A. Slupek, Marketing Specialist, Marketing Order Administration
Branch, F&V, AMS, USDA, Room 2523-S, P.O. Box 96456, Washington, DC
20050-6456; Telephone: (202) 205-2830, or FAX (202) 720-5698.
SUPPLEMENTARY INFORMATION: This rule is issued under Marketing
Agreement and Order No. 989 [7 CFR Part 989] (order), regulating the
handling of raisins produced from grapes grown in California. The order
is effective under the Agricultural Marketing Agreement Act of 1937, as
amended, [7 U.S.C. 601-674], hereinafter referred to as the ``Act.''
The Department of Agriculture (Department) is issuing this rule in
conformance with Executive Order 12866.
This rule has been reviewed under Executive Order 12778, Civil
Justice Reform. This rule will allow the Committee to implement an
inventory price adjustment program for Zante Currents during the 1994-
95 crop year, which began August 1, 1994. This rule will not preempt
any State or local laws, regulations, or policies, unless they present
an irreconcilable conflict with this rule.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 608c(15)(A) of the
Act, any handler subject to an order may file with the Secretary a
petition stating that the order, any provision of the order, or any
obligation imposed in connection with the order is not in accordance
with law and request a modification of the order or to be exempted
therefrom. A handler is afforded the opportunity for a hearing on the
petition. After a 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 the date of entry of the ruling.
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Administrator of the Agricultural Marketing Service
(AMS) has considered the economic impact of this action 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.
There are approximately 20 handlers of California raisins who are
subject to regulation under the order, and approximately 5,000
producers in the regulated area. Small agricultural service firms have
been defined by the Small Business Administration [13 CFR 121.601] as
those having annual receipts of less than $5,000,000, and small
agricultural producers are defined as those whose annual receipts are
less than $500,000. A minority of handlers and a majority of producers
of California raisins may be classified as small entities.
Under the order, seasonal volume regulations can be established.
The free percentages prescribe the portion of the crop that can be
shipped at any time to any market. The reserve percentages prescribe
the portion of the crop that must be held for delayed shipment. Reserve
raisins are held in a reserve pool by handlers for the account of the
Committee. Funds generated from the sale of reserve pool raisins are
distributed equally to equity holders (growers).
This final rule will suspend the penultimate sentence in
Sec. 989.67(j) of the order for the 1994-95 crop year. That sentence
provides that: ``However, such raisins shall not be sold at a price
below that which the committee concludes reflects the average price
received by producers for free tonnage of the same varietal type
purchased by handlers during the current crop year up to the time of
any offer for sale of reserve tonnage by the committee, to which shall
be added the costs to the equity holders incurred by the committee on
account of receiving, inspecting, storing, fumigating, insuring, and
holding of said raisins, and including costs of taxes and interest:
Provided, That, where the outlook for the next crop year or other
factors have caused a downward trend in the prices received by
producers for free tonnage raisins or in the prices received by
handlers for free tonnage packed raisins, reserve tonnage may be sold
to handlers at the currently prevailing or the approximate computed
field price for free tonnage raisins, as determined by the committee.''
Limited volumes of Zante Currants are produced in California. The
1993-94 California production of Zante Currants was 5,643 tons, which
is 32 percent larger than the prior four-year average of 4,279 tons.
The estimated 1994-95 production is greater than 6,500 tons or over 50
percent more than the 1989-92 four-year average. It is anticipated that
the production of Zante Currants will continue to increase in the next
one to three years as newly planted acreage begins to produce and/or
reach full production.
Greece is the major producer of currants, generally representing at
least 85 percent of the annual world production of such raisins. In
1992-93, Greek currants were in short supply and prices rose sharply.
As a result, the market for California Zante Currants strengthened
significantly and the grower price increased to $1,600 from $1,365 per
ton the previous season. In 1993-94, the grower price for California
Zante Currants was $1,200 per ton. The 1993-94 Greek currant crop was
approximately 50,000 tons, of excellent quality, and prices were very
competitive with those quoted for California Zante Currants. This
resulted in a significant drop in California Zante Currant shipments
here and abroad.
Currently, the California raisin industry is carrying a very large
supply (approximately 4,000 tons) of 1992-93 and 1993-94 crop Zante
Currants and projects a record production (approximately 6,500 tons) in
1994-95. The trade is aware of this supply problem and forward
purchases from handlers have decreased. Sales are not expected to
increase until corrective pricing action is taken by handlers. Before
that can begin, however, handlers need assurance that the value of some
of their free Zante Currant inventories from the 1992-93 and 1993-94
production years can be reduced to the recently established $980 per
ton 1994-95 free tonnage Zante Currant field price, thus reducing their
potential losses on existing free raisin inventory. Suspending the
penultimate sentence in Sec. 989.67(j) can assure this protection, as
it will allow the Committee to sell 1994 crop reserve tonnage to
handlers for free use at a lower price than the established field
price.
The Committee plans to offer handlers one ton of 1994-95 crop Zante
Currant reserve raisins at $100 per ton for every four tons of free
Zante Currants held by them on July 31, 1994. Purchasing free tonnage
1994-95 crop Zante Currants at $980 per ton and reserve Zante Currants
at $100 per ton in accordance with this formula will allow handlers'
inventories to achieve an approximate net value of $980 per ton. In the
absence of the suspension, these price adjustments could not be
accomplished. In the absence of such adjustments, the industry could
not compete effectively with foreign-produced currants without
substantial losses on the part of packers and producers. Moreover, a
significant loss in foreign markets could result. A loss of domestic
markets to foreign imports could also result.
In recommending its action, the Committee recognized that it would
be selling a portion of the reserve raisins at a price well below the
cost of producing raisins, and that the net proceeds to equity holders
would be quite low. In the absence of this action, open price
contracting between producers and handlers on 1994-95 crop Zante
Currant deliveries was a possibility because of the excess supplies and
inflated value of the inventory. On the basis of the Committee's
recommendation, handlers did not use open price contracting but instead
in negotiations with the Raisin Bargaining Association (Association)
agreed to pay producers the aforementioned $980 per ton price for free
tonnage Zante Currants. Without the inventory adjustment program, very
low prices for all 1994-95 crop Zante Currants were likely. The
Association is a cooperative which bargains sales terms with
independent handlers on behalf of its producer members.
It is recognized that the effects of this action on individual
entities will vary depending on their financial conditions and their
equities in the reserve pool. However, the impact is not expected to be
significant. In the long term, the benefits of becoming more
competitive under current marketing conditions should outweigh any
adverse short-term impact and result in benefits to all industry
entities. The domestic inventory price adjustment accomplished through
this action will permit an overall price reduction for handlers' sales
of Zante Currants, enabling the industry to compete more effectively
with lower-priced foreign-produced currants, and to more aggressively
market Zante Currants in the interest of maintaining and expanding
existing domestic and foreign markets and in developing new markets.
The net result of this action is likely to be positive as a result of
increased marketings of Zante Currants at reduced prices. On the basis
of all of the foregoing, the Administrator of the AMS has determined
that the issuance of this rule 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, it is
determined that: (1) There has been a change of economic or marketing
conditions to warrant the sale of Zante Currant reserve raisins to
handlers to provide them with raisins to sell as free tonnage, pursuant
to section 989.67(j), and (2) under the conditions presently existing
in the raisin industry, the penultimate sentence in section 989.67(j)
does not now tend to effectuate the declared policy of the Act and is
hereby suspended with regard to Zante Currants pursuant to section
989.91(b). However, such suspension shall continue only through July
31, 1995, at which time it shall terminate and the suspended sentence
will become operative again beginning August 1, 1995.
Pursuant to 5 U.S.C. 553, it is also found and determined that,
upon good cause, it is impracticable, unnecessary, and contrary to the
public interest to give preliminary notice prior to putting this rule
into effect, and that good cause exists for not postponing the
effective date of this action until 30 days after publication in the
Federal Register because: (1) Producers and handlers have been
conducting their marketing operations on the premise that the value of
the 1992-93 and 1993-94 Zante Currants carried into the 1994-95 season
would be averaged down to the 1994-95 negotiated free tonnage price;
(2) the Committee met on October 5, 1994, and computed and announced
preliminary free and reserve tonnage percentages for Zante Currant
raisins; (3) prompt implementation of this action is necessary to
prevent disruption in the marketplace; and (4) the industry is aware of
this action, which was unanimously recommended by the Committee at a
public meeting.
List of Subjects in 7 CFR Part 989
Grapes, Marketing agreements, Raisins, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, 7 CFR part 989 is
amended as follows:
PART 989--RAISINS PRODUCED FROM GRAPES GROWN IN CALIFORNIA
1. The authority citation for 7 CFR part 989 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
Sec. 989.67 [Suspended in Part]
2. In Sec. 989.67(j) the penultimate sentence is suspended
effective October 27, 1994 through July 31, 1995.
Dated: October 20, 1994.
Patricia Jensen,
Acting Assistant Secretary, Marketing and Regulatory Programs.
[FR Doc. 94-26638 Filed 10-26-94; 8:45 am]
BILLING CODE 3410-02-P