[Federal Register Volume 62, Number 243 (Thursday, December 18, 1997)]
[Proposed Rules]
[Pages 66312-66315]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33004]
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Proposed Rules
Federal Register
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This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 62, No. 243 / Thursday, December 18, 1997 /
Proposed Rules
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 966 and 980
[Docket No. FV98-966-1 PR]
Tomatoes Grown in Florida and Imported Tomatoes; Proposed Rule to
Change Minimum Grade Requirements
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule.
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SUMMARY: This proposal would increase the minimum grade requirements
for Florida and imported tomatoes. The grade requirements would be
changed from U.S. No. 3 to U.S. No. 2. The proposed rule would help the
Florida tomato industry meet domestic market needs, increase returns to
producers, and provide consumers with higher quality tomatoes.
Application of the increased grade requirements to imported tomatoes is
required under section 8e of the Agricultural Marketing Agreement Act
of 1937.
DATES: Comments must be received by January 20, 1998.
ADDRESSES: Interested persons are invited to submit written comments
concerning this proposal. Comments must be sent in triplicate to the
Docket Clerk, Fruit and Vegetable Programs, AMS, USDA, room 2525-S,
P.O. Box 96456, Washington, DC 20090-6456; Fax: (202) 720-5698. All
comments should reference the docket number and the date and page
number of this issue of the Federal Register and will be made available
for public inspection in the Office of the Docket Clerk during regular
business hours.
FOR FURTHER INFORMATION CONTACT: Christian Nissen, Southeast Marketing
Field Office, Marketing Order Administration Branch, Fruit and
Vegetable Programs, AMS, USDA, 301 Third Street, N.W., Suite 206,
Winter Haven, Florida 33881; telephone: (941) 299-4770, Fax: (941) 299-
5169; or George Kelhart, Marketing Order Administration Branch, Fruit
and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456,
Washington, DC 20090-6456; telephone (202) 720-2491, Fax: (202) 720-
5698. Small businesses may request information on compliance with this
regulation by contacting Jay Guerber, Marketing Order Administration
Branch, Fruit and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box
96456, Washington, DC 20090-6456; telephone (202) 720-2491, Fax: (202)
720-5698.
SUPPLEMENTARY INFORMATION: This proposal is issued under Marketing
Agreement No. 125 and Marketing Order No. 966, both as amended (7 CFR
part 966), regulating the handling of tomatoes grown in certain
designated counties in Florida, hereinafter referred to as the
``order.'' The marketing agreement and order are 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 proposal has been reviewed under Executive Order 12988, Civil
Justice Reform. This rule is not intended to have retroactive effect.
This proposal 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 to review the Secretary's
ruling on the petition, provided an action is filed not later than 20
days after the date of the entry of the ruling.
Section 8e of the Act specifies that whenever certain specified
commodities, including tomatoes, are regulated under a Federal
marketing order, imports of those commodities must meet the same or
comparable grade, size, quality, and maturity requirements as those in
effect for the domestically produced commodity. 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.
Under the order, tomatoes produced in the production area and
shipped to fresh market channels outside the regulated area are
required to meet grade, size, inspection, and container requirements.
These requirements are specified in Sec. 966.323 of the handling
regulations issued under the order. These requirements apply during the
period October 10 through June 15 each year. The regulated area
includes the portion of the State of Florida which is bounded by the
Suwannee River, the Georgia border, the Atlantic Ocean, and the Gulf of
Mexico. That is, the entire State of Florida, except the panhandle. The
production area is part of the regulated area. Specialty packed red
ripe tomatoes, yellow meated tomatoes, and single and double layer
place packed tomatoes are exempt from container net weight
requirements.
Under Sec. 966.323, all tomatoes, except for pear shaped, paste,
cherry, hydroponic, and greenhouse tomatoes, must be inspected as
specified in the United States Standards for Grades of Fresh Tomatoes
(7 CFR part 51.1855 through 51.1877; standards). Such tomatoes also
must be at least 2 \8/32\ inches in diameter, and sized with proper
equipment in one or more of the following ranges of diameters.
------------------------------------------------------------------------
Inches Inches
Size designation minimum maximum
diameter diameter
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Medium............................................ 2 \8/32\ 2 \17/32\
Large............................................. 2 \16/32\ 2 \25/32\
Extra large....................................... 2 \24/32\
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These size designations and diameter ranges are the same as
specified in Sec. 51.1859 of the standards. All tomatoes in the Medium
size designation are required to grade at least a U.S. No. 2, while
tomatoes in the larger size designations are only required to grade
[[Page 66313]]
at least a U.S. No. 3. Section 966.52 of the order provides authority
for the establishment and modification of regulations applicable to the
handling of particular grades, sizes, and size designations of
tomatoes.
This rule would increase the minimum grade requirements from U.S.
No. 3 to U.S. No. 2 for all tomatoes regardless of size. This change in
grade requirements was recommended by the Florida Tomato Committee
(Committee) on September 5, 1997, by a vote of 10 in favor and 2
opposed. The grade requirement change would eliminate shipments of U.S.
No. 3 grade tomatoes from the regulated area. The opponents of this
change stated that there were good markets for U.S. No. 3 tomatoes in
years of short supply, and when crop quality was down due to adverse
weather conditions. The members in favor countered stating that during
normal seasons U.S. No. 3 grade tomatoes comprised a small share of
total shipments and that such shipments had a price depressing effect
on the higher quality tomatoes shipped during those seasons.
At the same meeting, the Committee unanimously recommended an
increase in the diameter size requirement for Florida tomatoes from 2
\8/32\ inches to 2 \9/32\ inches, that the size designations of Medium,
Large, and Extra Large be changed to numeric size designations of
6 x 7, 6 x 6, and 5 x 6, respectively, and that the diameter size
ranges for the designated sizes be increased slightly. These size
ranges are different from those specified in Sec. 51.1859 of the
standards. The proposed minimum size and size designation changes were
addressed in a separate rulemaking action. That action was published in
the Federal Register on October 6, 1997 (62 FR 52047). Interested
persons were invited to submit written comments until October 16, 1997.
Subsequently, the period for comments was reopened until November 5,
1997, by a document published in the Federal Register on October 22,
1997 (62 FR 54809).
Based on an analysis of markets and demands of buyers, the
Committee believes that increasing the minimum grade from U.S. No. 3 to
U.S. No. 2 would improve the marketing of Florida tomatoes, and help
the industry protect its markets from foreign competition. The increase
in grade requirements is expected to prevent low-quality tomatoes from
reaching the marketplace, and improve the overall quality of tomatoes
in fresh market channels.
Tomatoes grading U.S. No. 3 must be well developed, may be
misshapen, and cannot be seriously damaged by sunscald (7 CFR 51.1858).
Tomatoes grading U.S. No. 2 have to be well developed, reasonably well-
formed, and free from sunscald (7 CFR 51.1857). Sunscald is an injury
which usually occurs on the sides or upper half of the tomato, but may
occur wherever the rays of the sun strike most directly. Sunscald
results in the formation of a whitish, shiny, blistered area on the
tomato. The affected tissue gradually collapses, forming a slight
sunken area that may become pale yellow, and wrinkle or shrivel as the
tomato ripens. This detracts from the overall quality of the tomato.
The difference between tomatoes grading U.S. No. 3 and U.S. No. 2
with regard to development, shape, and sunscald is especially
noticeable in smaller sized tomatoes, but also noticeable in larger
sized tomatoes. U.S. No. 3 grade tomatoes are generally of very poor
quality, and are not desired by the consumer.
The Committee indicated that when tomatoes of this quality are
offered for sale to consumers in a normal season these tomatoes have an
adverse affect on the demand and sale of other Florida tomatoes. The
increase in grade requirements is expected to improve the quality of
the tomato packs shipped from Florida.
The proponents of the change indicated that the marketplace is
changing and that the Florida industry has been shipping fewer U.S. No.
3 grade tomatoes than it had in past seasons in response to those
changes. During the last three shipping seasons, the quantity of U.S.
No. 3 grade tomatoes shipped as a percentage of total shipments ranged
from a low of 4.4 percent to a high of 7.6 percent.
At the meeting, the Committee discussed whether eliminating U.S.
No. 3 tomatoes would diminish the quality of the U.S. No. 2 grade pack
by handlers trying to commingle more U.S. No. 3 grade as U.S. No. 2
grade. The proponents acknowledged that some of the tomatoes currently
being sold at the U.S. No. 3 grade could be reworked to make U.S. No. 2
grade. They stated, however, that they were interested in eliminating
the true U.S. No. 3 grade which in normal seasons has tended to detract
from the overall pack and depress prices for higher quality tomatoes.
The proposed grade increase is expected to improve the overall
tomato pack, provide consumers with the quality of tomatoes desired,
and, thus, encourage repeat purchases. In other words, the new grade
requirements would allow handlers to respond better to market
preferences which is expected to benefit producers and handlers of
Florida tomatoes.
Section 8e of the Act requires that when certain domestically
produced commodities, including tomatoes, are regulated under a Federal
marketing order, imports of that commodity must meet the same or
comparable grade, size, quality, or maturity requirements for the
domestically produced commodity. The current import regulations are
specified in 7 CFR 980.212. Similar to the order, regulations apply
during the period October 10 through June 15 when the Florida handling
requirements are in effect. Because this proposal would increase the
minimum grade for domestic tomato shipments, this increase would be
applicable to imported tomatoes.
Florida tomatoes must be packed in accordance with three specified
size designations, and tomatoes falling into different size
designations may not be commingled in a single container. These pack
restrictions do not apply to imported tomatoes. Because pack
requirements do not apply, different sizes of imported tomatoes may be
commingled in the same container.
Current import requirements specify that all lots with a minimum
diameter of 2\17/32\ inches and larger shall meet at least a U.S. No. 3
grade. All other tomatoes shall meet at least a U.S. No. 2 grade. Any
lot with more than 10 percent of its tomatoes less than 2\17/32\ inches
in diameter is required to grade at least U.S. No. 2. This proposed
rule would change these requirements to reflect the size and size
designation changes proposed in the October 6 and 22, 1997, issue of
the Federal Register by requiring all lots of imported tomatoes to
grade at least U.S. No. 2, regardless of size.
This change is expected to benefit the marketers of both Florida
and imported tomatoes by providing consumers with the higher quality
tomatoes they desire. The Department has contacted a few tomato
importers concerning imports. The importers indicated that they will
not have difficulty meeting the U.S. No. 2 grade requirements. Thus,
the Department believes that the proposed increase will not limit the
quantity of imported tomatoes or place an undue burden on exporters, or
importers of tomatoes. The expected increase in customer satisfaction
should benefit all tomato importers regardless of size.
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.
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Accordingly, the AMS has prepared this initial 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 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
which regulate the handling of domestically produced products. Thus,
this proposed rule would have small entity orientation, and would
impact both small and large business entities in a manner comparable to
those rules issued under marketing orders.
There are approximately 65 handlers of Florida tomatoes who are
subject to regulation under the order and approximately 75 tomato
producers in the regulated area. In addition, at least 170 importers of
tomatoes are subject to import regulations and would be affected by
this proposed rule. Small agricultural service firms have been defined
by the Small Business Administration (SBA) (13 CFR 121.601) as those
having annual receipts of less than $5,000,000, and small agricultural
producers are defined as those having annual receipts of less than
$500,000.
Committee data indicates that approximately 20 percent of the
Florida handlers handle 80 percent of the total volume shipped outside
the regulated area. Based on this information, the shipment information
for the 1996-97 season, and the 1996-97 season average price of $7.97
per 25 pound equivalent carton, the majority of handlers would be
classified as small entities as defined by the SBA. The majority of
producers of Florida tomatoes also may be classified as small entities.
Moreover, the Department believes that most importers may be classified
as small entities.
Under Sec. 966.52 of the Florida tomato marketing order, the
Committee, among other things, has authority to increase the minimum
grade requirements for tomatoes grown in the defined production area
and handled under the order. This proposed rule would increase the
minimum grade from U.S. No. 3 to U.S. No. 2. As provided under section
8e of the Agricultural Marketing Agreement Act of 1937, the proposed
grade increase would apply to imported tomatoes.
The Committee recommended the grade increase to improve the
marketing of Florida tomatoes and follow the recent industry trend of
shipping higher grade tomatoes. This trend is in response to a strong
consumer demand for such tomatoes. The Committee noted that a tomato
can be unattractive and still meet the requirements of the U.S. No. 3
grade, and that this can have a negative impact on the market for
higher quality tomatoes.
According to the Committee, when supplies are not short or crop
quality is not lowered due to adverse weather conditions, U.S. No. 3
grade tomatoes comprise a small share of total shipments. During the
last three shipping seasons, the quantity of U.S. No. 3 grade shipped
as a percentage of total shipments ranged from a low of 4.4 percent to
a high of 7.6 percent. Thus, the increase in the minimum grade
requirements is not expected to significantly impact the total number
of Florida shipments. It is, however, expected to have a positive
effect in the marketplace by providing a strong price base for the
industry. As mentioned earlier, the Committee believes that U.S. No.
3's have a price depressing effect on higher grade shipments.
According to the Committee, during the 1996-1997 season, about 47.9
million 25 pound equivalents were shipped from Florida. Of that amount,
only 4.9 percent were U.S. No. 3 grade. The value of all sales during
that season totaled about $381.4. The value of the U.S. No. 3 grade
tomatoes totaled about $16.6 million, or about 4.4 percent of total
sales during that season. In 1995-96, the total of all tomatoes shipped
was 47.3 million 25 pound equivalents. The U.S. No. 3 grade portion was
7.9 percent. That season, the value of all sales totaled about $369.7
million, and the U.S. No. 3's comprised 7.6 percent of the total value.
The percentages for the 1994-95 season were similar with U.S. No. 3's
making up about 6.8 percent of the total shipments, and the sales value
of the U.S. No. 3 grade making up about 6.1 percent of the total value.
That season, total industry shipments totaled about 55.5 million 25
pound equivalents, and the total value was about $388.3 million.
The Committee also noted that a recent voluntary elimination of
U.S. No. 3 grade by the industry had been successful in strengthening
the market and in supporting grower returns. This proposal is expected
to continue those successes. Without an increase in grade requirements,
the Committee believes that an erosion of market confidence and
producer returns could occur.
The raising of the minimum grade from U.S. No. 3 to U.S. No. 2 is
expected to impact all handlers uniformly, whether small or large,
because all handlers, regardless of size, currently pack about the same
percentage of U.S. No. 3 grade tomatoes. The benefits of the higher
prices resulting from eliminating the U.S. No. 3's will be distributed
evenly among all handlers, and are expected to be greater than the
minimal costs expected to be incurred.
Direct costs to the industry associated with the minimum grade
requirement increase would include sorting and packing line adjustments
to operate under the new requirements. These costs are expected to be
minimal relative to the benefits expected. Other costs would include
possible losses from tomatoes not meeting the U.S. No. 2 grade
requirements. These losses also are expected to be minimal when
compared to marketplace benefits expected, and the fact that tomatoes
lower in quality than U.S. No. 2 could continue to be shipped within
the regulated area, as defined in the marketing order, or shipped for
processing.
This proposal is expected to similarly impact importers of tomatoes
as far as the grade increase is concerned. That is, tomatoes lower in
grade than U.S. No. 2 could be marketed outside the United States.
Additionally, the marketplace price and quality benefits expected for
Florida growers and handlers as a result of this proposal would also
benefit exporters and importers of tomatoes. Consumers would also
benefit as a result of the higher quality product available in the
marketplace. As mentioned earlier, the benefits of this rule are not
expected to be disproportionately greater or lesser for small entities
than for large entities.
The Committee discussed alternatives to this recommendation,
including leaving the grade requirements unchanged. However, after
thoroughly discussing the issue the majority of the Committee members
agreed that the grade increase was necessary to improve pack appearance
and effectively compete in the present market. During the discussion,
most Committee members acknowledged that U.S. No. 3 grade tomatoes
could be important to the market in years of short supply and lower
than normal quality resulting from adverse weather conditions. However,
those members also pointed out that during normal seasons U.S. No. 3
tomatoes were not popular in the marketplace, and that the lower grade
had a price depressing effect on better grade tomatoes.
[[Page 66315]]
Mexico is the largest exporter of tomatoes to the United States.
Over the last 10 years, Mexican exports to the United States averaged
32,527 containers of 25,000 pound equivalents per season (October 5-
July 5) and comprised about 99 percent of all imported tomatoes to the
United States during that time. Total imports during that period
averaged 32,752 containers of 25,000 pound equivalents (October 5-July
5). Some of the imports from Mexico may have been transhipped to
Canada. Small quantities of tomatoes are imported from Caribbean Basin
countries. Domestic shipments for the past 10 years averaged 108,577
containers of 25,000 pound equivalents (October 5-July 5). Florida
shipments comprised about 48 percent of the total shipments for the
same period. This information is from AMS Market News Branch data that
most closely approximates the Florida shipping season.
The grade increase is expected to benefit the marketers of both
Florida and imported tomatoes by providing consumers with higher
quality tomatoes. The Department has contacted a few tomato importers
concerning imports. The importers indicated that they would not have
undue difficulty meeting the higher grade requirements. Also,
Department fresh products inspectors at the Port of Nogales, Arizona,
the port were most Mexican produced tomatoes enter the United States,
estimated that only 2 to 3 percent of the total tomato imports from
Mexico were U.S. No. 3 grade. The remainder were U.S. No. 2 grade and
higher. Thus, the Department believes that the proposed increase will
not limit the quantity of imported tomatoes or place an undue burden on
exporters, or importers of tomatoes. The expected increase in customer
satisfaction and more positive marketplace atmosphere resulting from
providing the desired quality should benefit all tomato importers
regardless of size.
This action would not impose any additional reporting or record
keeping requirements on either small or large handlers. As with all
Federal marketing order programs, reports and forms are periodically
reviewed to reduce information requirements and duplication by industry
and public sector agencies.
The Department has not identified any relevant Federal rules that
duplicate, overlap or conflict with this proposed rule.
In addition, the Committee's meeting was widely publicized
throughout the Florida tomato industry and all interested persons were
invited to attend the meeting and participate in Committee
deliberations on all issues. Like all Committee meetings, the September
5, 1997, meeting was a public meeting and all entities, both large and
small, were able to express views on this issue. Finally, interested
persons are invited to submit information on the regulatory and
informational impacts of this action on small businesses.
In accordance with section 8e of the Act, the United States Trade
Representative has concurred with the issuance of this proposed rule.
A 30-day comment period is provided to allow interested persons to
respond to this proposal. Florida tomato handlers began shipping
tomatoes in October. Thirty days is deemed appropriate because this
rule, if adopted, needs to be in place as soon as possible to cover as
much of the 1997-98 shipping season as feasible. In addition, handlers
need time to adjust their sorting and packing line equipment to meet
the higher grade requirements. Florida tomato handlers are aware of
this issue, which has been widely discussed at various industry and
association meetings and was recommended by a majority of the
Committee. All comments received in a timely manner will be considered
prior to finalization of this rule.
List of Subjects in 7 CFR Parts 966 and 980
Marketing agreements, Reporting and recordkeeping requirements,
Tomatoes.
For the reasons set forth in the preamble, 7 CFR parts 966 and 980
are proposed to be amended as follows:
PART 966--TOMATOES GROWN IN FLORIDA
PART 980--VEGETABLES; IMPORT REGULATIONS
1. The authority citation for 7 CFR parts 966 and 980 continue to
read as follows:
Authority: 7 U.S.C. 601-674.
2. Section 966.323 is amended by revising paragraph (a)(1) to read
as follows:
Sec. 966.323 Handling regulation.
* * * * *
(a) Grade, size, container, and inspection requirements--(1) Grade.
Tomatoes shall be graded and meet the requirements specified for U.S.
No. 1, U.S. Combination, or U.S. No. 2 of the U.S. Standards for Grades
of Fresh Tomatoes. When not more than 15 percent of the tomatoes in any
lot fail to meet the requirements of U.S. No. 1 grade and not more than
one-third of this 15 percent (or 5 percent) are comprised of defects
causing very serious damage including not more than 1 percent of
tomatoes which are soft or affected by decay, such tomatoes may be
shipped and designated as at least 85 percent U.S. No. 1 grade.
* * * * *
3. Section 980.212 is amended by revising paragraph (b)(1) to read
as follows:
Sec. 980.212 Import regulations; tomatoes.
* * * * *
(b) * * *
(1) From October 10 through June 15 of each season, tomatoes
offered for importation shall be at least 2 8/32 inches in diameter.
Not more than 10 percent, by count, in any lot may be smaller than the
minimum specified diameter. All lots of tomatoes shall be at least U.S.
No. 2 grade.
* * * * *
Dated: December 12, 1997.
Eric M. Forman,
Acting Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 97-33004 Filed 12-17-97; 8:45 am]
BILLING CODE 3410-02-P
