94-26638. Raisins Produced From Grapes Grown in California; Temporary Suspension of Certain Reserve Tonnage Pricing Provisions  

  • [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
    
    
    

Document Information

Published:
10/27/1994
Department:
Agricultural Marketing Service
Entry Type:
Uncategorized Document
Action:
Final rule.
Document Number:
94-26638
Dates:
October 27, 1994 through July 31, 1995.
Pages:
0-0 (1 pages)
Docket Numbers:
Federal Register: October 27, 1994, Docket No. FV94-989-4FR
CFR: (2)
7 CFR 989.67(j)
7 CFR 989.67