[Federal Register Volume 62, Number 145 (Tuesday, July 29, 1997)]
[Proposed Rules]
[Pages 40482-40487]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-20034]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 905
[Docket No. FV97-905-1 PR]
Oranges, Grapefruit, Tangerines, and Tangelos Grown in Florida;
Limiting the Volume of Small Florida Red Seedless Grapefruit
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule.
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SUMMARY: This proposed rule invites comments on limiting the volume of
small red seedless grapefruit entering the fresh market under the
marketing order covering oranges, grapefruit, tangerines, and tangelos
grown in Florida. The marketing order is administered locally by the
Citrus Administrative Committee (committee). This rule would limit the
volume of size 48 and/or size 56 red seedless grapefruit handlers could
ship during the first 11 weeks of the 1997-1998 season that begins in
September. This proposal would provide a sufficient supply of small
sized red seedless grapefruit to meet market demand, without saturating
all markets with these small sizes. The committee believes this rule is
necessary to help stabilize the market and improve grower returns.
DATES: Comments must be received by August 13, 1997.
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 Division, 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: William G. Pimental, Southeast
Marketing Field Office, AMS, USDA, P.O. Box 2276, Winter Haven, Florida
33883-2276; telephone: (941) 299-4770, Fax: (941) 299-5169; or Anne
Dec, Marketing Order Administration Branch, F&V, AMS, USDA, room 2522-
S, P.O. Box 96456, Washington, DC 20090-6456; telephone: (202) 720-
5053, 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 Division, 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. 84 and Marketing Order No. 905, both as amended (7 CFR
part 905), regulating the handling of oranges, grapefruit, tangerines,
and tangelos grown 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 date of the entry of the ruling.
The order provides for the establishment of grade and size
requirements for Florida citrus, with the concurrence of the Secretary.
These grade and size requirements are designed to provide fresh markets
with citrus fruit of acceptable quality and size. This helps create
buyer confidence and contributes to stable marketing conditions. This
is in the interest of growers, handlers, and consumers, and is designed
to increase returns to Florida citrus growers. The current minimum
grade standard for red seedless grapefruit is U.S. No. 1, and the
minimum size requirement is size 56 (at least 3\5/16\ inches in
diameter).
[[Page 40483]]
Section 905.52 of the order provides authority to limit shipments
of any grade or size, or both, of any variety of Florida citrus. Such
limitations may restrict the shipment of a portion of a specified grade
or size of a variety. Under such a limitation, the quantity of such
grade or size that may be shipped by a handler during a particular week
would be established as a percentage of the total shipments of such
variety by such handler in a prior period, established by the committee
and approved by the Secretary, in which the handler shipped such
variety.
Section 905.153 of the order provides procedures for limiting the
volume of small red seedless grapefruit entering the fresh market. The
procedures specify that the committee may recommend that only a certain
percentage of sizes 48 and/or 56 red seedless grapefruit be made
available for shipment into fresh market channels for any week or weeks
during the regulatory period. The 11 week period begins the third
Monday in September. Under such a limitation, the quantity of sizes 48
and/or 56 red seedless grapefruit that may be shipped by a handler
during a regulated week is calculated using the recommended percentage.
By taking the recommended weekly percentage times the average weekly
volume of red grapefruit handled by such handler in the previous five
seasons, handlers can calculate the volume of sizes 48 and/or 56 they
may ship in a regulated week.
This proposed rule would limit the volume of small red seedless
grapefruit entering the fresh market for each week of the 11 week
period beginning the week of September 15. The proposal would limit the
volume of sizes 48 and/or 56 red seedless grapefruit by establishing
the weekly percentage for each of the 11 weeks at 25 percent. This
action was recommended by the committee at its meeting on May 28, 1997,
by a vote of 10 in favor to 7 opposed.
For the past few seasons, returns on red seedless grapefruit have
been at all time lows, often not returning the cost of production. On
tree prices for red seedless grapefruit have declined steadily from
$9.60 per carton (3/5 bushel) during the 1989-90 season, to $3.45 per
carton during the 1994-95 season, to a low of $1.41 per carton during
the 1996-97 season. The committee believes that to stabilize the market
and improve returns to growers, demand for fresh red seedless
grapefruit must be stabilized and increased.
One problem contributing to the current state of the market is the
excessive number of small sized grapefruit shipped early in the
marketing season. During the past three seasons, sizes 48 and 56
accounted for 34 percent of total shipments during the 11 week
regulatory period, with the average weekly percentage exceeding 40
percent of shipments. This contrasts with sizes 48 and 56 representing
only 26 percent of total shipments for the remainder of the season.
While there is a market for early grapefruit, the shipment of large
quantities of small red seedless grapefruit in a short period
oversupplies the fresh market for these sizes and negatively impacts
the market for all sizes.
For the majority of the season, larger sizes return better prices
than smaller sizes. However, there is a push early in the season to get
fruit into the market to take advantage of the higher prices available
at the beginning of the season. The early season crop tends to have a
greater percentage of small sizes. This creates a glut of smaller,
lower priced fruit on the market that drives down the price for all
sizes. Early in the season, larger sized fruit commands a premium
price. In some cases, the f.o.b. is $4 to $6 a carton more than for the
smaller sizes. In early October, the f.o.b. for a size 27 averages
around $10.00 per carton. This compares to an average f.o.b. of $5.50
per carton for size 56. By the end of the 11 week period outlined in
this rule, the f.o.b. for large sizes has dropped to within two dollars
of the f.o.b. for small sizes.
In the past three seasons, during the period covered by this rule,
prices of red seedless grapefruit have fallen from a weighted average
f.o.b. of $7.80 per carton to an average f.o.b. of $5.50 per carton.
Even though later in the season the crop has sized to naturally limit
the amount of smaller sizes available for shipment, the price structure
in the market has already been negatively affected. In the past three
years, the market has not recovered, and the f.o.b. for all sizes fell
to around $5.00 to $6.00 per carton for most of the rest of the season.
The committee discussed this issue at length at several meetings.
The committee believes that the overshipment of smaller sized red
seedless grapefruit early in the season has contributed to below
production cost returns for growers and lower on tree values. An
economic study done by the University of Florida--Institute of Food and
Agricultural Sciences (UF-IFAS) in May 1997, found that on tree prices
have fallen from a high near $7.00 in 1991-92 to around $1.50 for this
past season. The study projects that if the industry elects to make no
changes, the on tree price will remain around $1.50. The study also
indicates that increasing minimum size restrictions could help to raise
returns.
The committee examined shipment data covering the 11 week
regulatory period for the last four seasons. The information contained
the amounts and percentages of sizes 48 and 56 shipped during each
week. They compared this information with tables outlining weekly
f.o.b. figures for each size. Based on this statistical information
from past seasons, the committee members believe there is an indication
that once shipments of sizes 48 and 56 reach levels above 250,000
cartons a week, prices decline on those and most other sizes of red
seedless grapefruit. Without volume regulation, the industry has been
unable to limit the shipments of small sizes. The committee believes
that if shipments of small sizes could be maintained at around 250,000
cartons a week, prices should stabilize and demand for larger, more
profitable sizes should increase.
The committee discussed at what level to establish the weekly
percentages. They wanted to recommend a weekly percentage that would
provide a sufficient volume of small sizes without adversely impacting
the markets for larger sizes. The committee recommended that the
percentage for each of the 11 weeks be established at the 25 percent
level. This percentage, when combined with the average weekly shipments
for the total industry, would provide a total industry allotment of
244,195 cartons of sizes 48 and/or 56 red seedless grapefruit per
regulated week. This percentage would allow the total shipments of
small red seedless grapefruit to approach the 250,000 carton mark
during regulated weeks without exceeding it.
In its deliberations, the committee also recognized that if crop
and market conditions should change, the committee could recommend that
the percentage be increased or eliminated to provide for the shipment
of more small sizes in any one, or all of the 11 weeks. While the
official crop estimate will not be available until October, information
in the UF-IFAS study and committee discussions indicate that the 1997-
98 season production will be near or greater than the 1996-97 estimate
of 30.8 million boxes (1\3/5\ bushel) of red seedless grapefruit.
Committee members also stated that the crop is sizing well and should
produce a greater number of larger sizes than the past season. Using
this information on the 1997-98 crop, the committee members thought
that establishing a weekly percentage of 25 percent would provide
enough small sizes to supply those markets without disrupting the
markets for larger sizes.
[[Page 40484]]
Under the procedures in section 905.153, the quantity of sizes 48
and/or 56 red seedless grapefruit that may be shipped by a handler
during a regulated week would be calculated using the recommended
percentage of 25 percent. By taking the 25 percent weekly percentage
times the average weekly volume of red grapefruit handled by such
handler in the previous five seasons, handlers can calculate the volume
of sizes 48 and/or 56 they may ship in a regulated week.
An average week has been calculated by the committee for each
handler using the following formula. The total red seedless grapefruit
shipments by a handler during the 33 week period beginning the third
Monday in September and ending the first Sunday in May during the
previous five seasons are added and divided by five to establish an
average season. This average season was then divided by the 33 weeks in
a season to derive the average week. This average week would be the
base for each handler for each of the 11 weeks contained in the
regulation period. The weekly percentage, in this case, 25 percent, is
multiplied by a handler's average week. The total is that handler's
allotment of sizes 48 and/or 56 red seedless grapefruit for the given
week.
Under this proposed rule, the calculated allotment is the amount of
small sized red seedless grapefruit a handler could ship. If the
minimum size established under section 905.52 remains at size 56,
handlers could fill their allotment with size 56, size 48, or a
combination of the two sizes such that the total of these shipments are
within the established limits. If the minimum size under the order is
48, handlers could fill their allotment with size 48 fruit such that
the total of these shipments are within the established limits. The
committee staff would perform the specified calculations and provide
them to each handler.
To illustrate, suppose Handler A shipped a total of 50,000 cartons,
64,600 cartons, 45,000 cartons, 79,500 cartons, and 24,900 cartons of
red seedless grapefruit in the last five seasons, respectively. Adding
these season totals and dividing by five yields an average season of
52,800 cartons. The average season would then be divided by 33 weeks to
yield an average week, in this case, 1,600 cartons. This would be
Handler A's base. The weekly percentage of 25 percent would then be
applied to this amount. This would provide this handler with a weekly
allotment of 400 cartons (1,600 x .25) of size 48 and/or 56.
The average week for handlers with less than five previous seasons
of shipments would be calculated by the committee by averaging the
total shipments for the seasons they did ship red seedless grapefruit
during the immediately preceding five years and dividing that average
by 33. New handlers with no record of shipments would have no prior
period on which to base their average week. Therefore, under this
proposal, a new handler could ship small sizes equal to 25 percent of
their total volume of shipments during their first shipping week. Once
a new handler has established shipments, their average week will be
calculated as an average of the weeks they have shipped during the
current season.
This proposed rule would establish a weekly percentage of 25
percent for each of the 11 weeks to be regulated. The regulatory period
runs from the third Monday in September (September 15, 1997) through
the last Sunday in November (November 30, 1997). Each regulation week
would begin Monday at 12:00 a.m. and end at 11:59 p.m. the following
Sunday, since most handlers keep records based on Monday being the
beginning of the work week. If necessary, the committee could meet and
recommend a percentage above 25 percent to the Secretary at any time
during the regulatory period.
The rules and regulations contain a variety of provisions designed
to provide handlers with some marketing flexibility. When regulation is
established by the Secretary for a given week, the committee calculates
the quantity of small red seedless grapefruit which may be handled by
each handler. Section 905.153(d) provides allowances for overshipments,
loans, and transfers of allotment. These allowances should allow
handlers the opportunity to supply their markets while limiting the
impact of small sizes on a weekly basis.
During any week for which the Secretary has fixed the percentage of
sizes 48 and/or 56 red seedless grapefruit, any handler could handle an
amount of sizes 48 and/or 56 red seedless grapefruit not to exceed 110
percent of their allotment for that week. The quantity of overshipments
(the amount shipped in excess of a handler's weekly allotment) would be
deducted from the handler's allotment for the following week.
Overshipments would not be allowed during week 11 because there would
be no allotments the following week from which to deduct the
overshipments.
If handlers fail to use their entire allotments in a given week,
the amounts undershipped would not be carried forward to the following
week. However, a handler to whom an allotment has been issued could
lend or transfer all or part of such allotment (excluding the
overshipment allowance) to another handler. In the event of a loan,
each party would, prior to the completion of the loan agreement, notify
the committee of the proposed loan and date of repayment. If a transfer
of allotment is desired, each party would promptly notify the committee
so that proper adjustments of the records could be made. In each case,
the committee would confirm in writing all such transactions prior to
the following week. The committee could also act on behalf of handlers
wanting to arrange allotment loans or participate in the transfer of
allotment. Repayment of an allotment loan would be at the discretion of
the handlers party to the loan.
The committee would compute each handler's allotment by multiplying
the handler's average week by the percentage established by regulation
for that week. The committee would notify each handler prior to that
particular week of the quantity of sizes 48 and 56 red seedless
grapefruit such handler could handle during a particular week, making
the necessary adjustments for overshipments and loan repayments.
This rule does not affect the provision that handlers may ship up
to 15 standard packed cartons (12 bushels) of fruit per day exempt from
regulatory requirements. Fruit shipped in gift packages that are
individually addressed and not for resale, and fruit shipped for animal
feed are also exempt from handling requirements under specific
conditions. Also, fruit shipped to commercial processors for conversion
into canned or frozen products or into a beverage base are not subject
to the handling requirements under the order.
During committee deliberations, several concerns were raised
regarding this proposed regulation. One area of concern was the
possible impact this regulation may have on exports. Several members
stated that there is a strong demand in some export markets for small
sizes. Other members responded that the percentage set should allow
handlers enough volume of small sizes to meet the demand in these
markets. It was also stated that any shortfall an individual handler
might have could be filled by loan or transfer. There was also some
discussion that markets that normally demand small sizes have shown a
willingness to purchase larger sizes. In addition, committee data
indicate that the majority of export shipments occur after the 11 week
[[Page 40485]]
period when there are no restrictions on small sizes.
Another concern raised was the effect this proposal may have on
packouts. It was stated that this rule could reduce the volume packed,
resulting in higher packinghouse costs. The purpose of this rule is to
limit the volume of small sizes marketed early in the season. Larger
sizes could be substituted for smaller sizes with a minimum effect on
overall shipments. This rule may require more selective picking of only
the sizes desired, something that many growers are doing already. The
UF-IFAS study presented indicated that it would increase returns if
growers would harvest selectively and return to repick groves as the
grapefruit sized. This also would allow growers to maximize returns on
fresh grapefruit by not picking unprofitable grades and sizes of red
grapefruit that would be sent to the less profitable processing market.
The study also indicated that selective harvesting can reduce the
f.o.b. cost per carton. Therefore, this action should have a positive
impact on grower returns.
Several members were concerned about what would happen if market
conditions were to change. Other committee members responded that if
industry conditions were to change (for example, if there was a freeze,
or if the grapefruit was not sizing), the committee would meet and
recommend that the percentage be raised to allow for more small sizes,
or that the limits be removed all together.
Another concern raised was that market share could be lost to
Texas. According to the Economic Analysis Branch (EAB), of the Fruit
and Vegetable Division, of the Agricultural Marketing Service (AMS),
limiting shipments of small Florida grapefruit would probably not
result in a major shift to Texas grapefruit because the Texas industry
is much smaller and would have higher freight costs to some markets
supplied by Florida. The UF-IFAS study made similar findings. Texas
production is much smaller and has been susceptible to freezes that
take it out of the market. This has lessened its impact on the overall
grapefruit market.
One handler expressed that they ship early in the season and this
action could be very restrictive. Members responded that the
availability of loans and transfers would address these concerns. There
was also discussion of how restrictive this proposal would actually be.
Based on shipments from the past four seasons, available allotment
would have exceeded actual shipments for each of the first three weeks
that would be regulated under this rule. In the three seasons prior to
last season, if a 25 percent restriction on small sizes had been
applied during the 11 week period, only an average of 4.2 percent of
overall shipments during that period would have been affected. A large
percentage of this volume most likely could have been replaced by
larger sizes. A sufficient volume of small sized red grapefruit would
still be allowed into all channels of trade, and allowances would be in
place to help handlers address any market shortfall.
After considering the concerns expressed, and the available
information, the committee determined that this rule was needed to
regulate shipments of small sized red seedless grapefruit.
Section 8(e) of the Act requires that whenever grade, size, quality
or maturity requirements are in effect for certain commodities under a
domestic marketing order, including grapefruit, imports of that
commodity must meet the same or comparable requirements. This rule does
not change the minimum grade and size requirements under the order,
only the percentages of sizes 48 and/or 56 red grapefruit that may be
handled. Therefore, no change is necessary in the grapefruit import
regulations as a result of this action.
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), AMS has considered the economic impact of this action on
small entities. Accordingly, 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.
There are approximately 80 handlers subject to regulation under the
order and approximately 11,000 growers of citrus in the regulated area.
Small agricultural service firms, which includes handlers, 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.
Based on the Florida Agricultural Statistics Service and committee
data for the 1995-96 season, the average annual f.o.b. price for fresh
Florida red grapefruit during the 1995-96 season was $5.00 per 4/5
bushel cartons for all grapefruit shipments, and the total shipments
for the 1995-96 season were 23 million cartons of grapefruit.
Approximately 20 percent of all handlers handled 60 percent of Florida
grapefruit shipments. In addition, many of these handlers ship other
citrus fruit and products which are not included in committee data but
would contribute further to handler receipts. Using the average f.o.b.
price, about 80 percent of grapefruit handlers could be considered
small businesses under SBA's definition and about 20 percent of the
handlers could be considered large businesses. The majority of Florida
grapefruit handlers, and growers may be classified as small entities.
The committee believes that the overshipment of smaller sized red
seedless grapefruit early in the season has contributed to below
production cost returns for growers and lower on tree values. For the
past few seasons, returns on red seedless grapefruit have been at all
time lows, often not returning the cost of production. On tree prices
for red seedless grapefruit have declined steadily from $9.60 per
carton (3/5 bushel) during the 1989-90 season, to $3.45 per carton
during the 1994-95 season, to a low of $1.41 per carton during the
1996-97 season. The committee believes that to stabilize the market and
improve returns to growers, demand for fresh red seedless grapefruit
must be stabilized and increased.
Under the authority of section 905.52 of the order, this proposed
rule would limit the volume of small red seedless grapefruit entering
the fresh market for each week of the 11 week period beginning the week
of September 15. The proposal would limit the volume of sizes 48 and/or
56 red seedless grapefruit by establishing the weekly percentage for
each of the 11 weeks at 25 percent. Under such a limitation, the
quantity of sizes 48 and/or 56 red seedless grapefruit that may be
shipped by a handler during a particular week is calculated using the
recommended percentage. By taking the recommended percentage times the
average weekly volume of red grapefruit handled by such handler in the
previous five seasons, the committee would calculate a handler's weekly
allotment of small sizes. This proposal would provide a supply of small
sized red seedless grapefruit sufficient to meet market demand, without
saturating all markets with these small sizes. The committee believes
this rule is necessary to help stabilize the market and improve grower
returns.
At the meeting, there was discussion regarding the expected impact
of this
[[Page 40486]]
change on handlers and growers in terms of cost. Discussion focused on
the possibility that market share would be lost to Texas and that this
proposed rule could increase packinghouse costs. According to EAB,
limiting shipments of small Florida grapefruit would probably not
result in a major shift to Texas grapefruit because the Texas industry
is much smaller and would have higher freight costs to some markets
supplied by Florida. The UF-IFAS study made similar findings. Texas
production is much smaller and has been susceptible to freezes that
take it out of the market. This has lessened its impact on the overall
grapefruit market.
The concern about packinghouse costs was that this proposal would
mean lower packouts which may increase cost. However, the availability
of loans and transfers would provide some flexibility. Also, this
proposal would only affect small sizes and only during the 11 week
period. By substituting larger sizes and using loans and transfers,
packouts should approach the weekly volume of seasons prior to this
proposal.
The weekly percentage of 25 percent, when combined with the average
weekly shipments for the total industry, would provide a total industry
allotment of 244,195 cartons of sizes 48 and/or 56 red seedless
grapefruit per regulated week. Based on shipments from the past four
seasons, the total available weekly allotment of 244,195 cartons would
exceed actual shipments for each of the first three weeks that would be
regulated under this rule. In addition, if a 25 percent restriction on
small sizes had been applied during the 11 week period in the three
seasons prior to last season, an average of 4.2 percent of overall
shipments during that period would have been affected. A large
percentage of this volume most likely could have been replaced by
larger sizes. Under this proposal a sufficient volume of small sized
red grapefruit would still be allowed into all channels of trade, and
allowances would be in place to help handlers address any market
shortfall. Therefore, the overall impact on total seasonal shipments
and on industry cost should be minimal.
The committee also discussed the state of the market and the cost
of doing nothing. During the past three seasons, sizes 48 and 56
accounted for 34 percent of total shipments during the 11 week
regulatory period, with the average weekly percentage exceeding 40
percent of shipments. For the remainder of the season, sizes 48 and 56
represent only 26 percent of total shipments. While there is a market
for early grapefruit, the shipment of large quantities of small red
seedless grapefruit in a short period oversupplies the fresh market for
these sizes and negatively impacts the market for all sizes.
The early season crop tends to have a greater percentage of small
sizes. The large volume of smaller, lower priced fruit drives down the
price for all sizes. Early in the season, larger sized fruit commands a
premium price. In some cases, the f.o.b. is $4 to $6 a carton more than
for the smaller sizes. In early October, the f.o.b. for a size 27
averages around $10.00 per carton. This compares to an average f.o.b.
of $5.50 per carton for size 56. By the end of the 11 week period
outlined in this rule, the f.o.b. for large sizes has dropped to within
two dollars of the price for small sizes.
In the past three seasons, during the period covered by this rule,
prices of red seedless grapefruit have fallen from a weighted average
f.o.b. of $7.80 per carton to an average f.o.b. of $5.50 per carton.
Even though later in the season the crop has sized to naturally limit
the amount of smaller sizes available for shipment, the price structure
in the market has already been negatively affected. This leaves the
f.o.b. for all sizes around $5.00 to $6.00 per carton for the rest of
the season.
As previously stated, the on tree price of red seedless grapefruit
has also been falling. On tree prices for fresh red seedless grapefruit
have declined steadily from $9.60 per carton during the 1989-90 season,
to $3.45 per carton during the 1994-95 season, to a low of $1.41 per
carton during the 1996-97 season. In many cases, prices during the past
two seasons have provided returns less than production costs. This
price reduction could force many small growers out of business. If no
action is taken, the UF-IFAS study indicates that on tree returns would
remain at levels around $1.50.
This proposal would provide a supply of small sized red seedless
grapefruit to meet market demand, without saturating all markets with
these small sizes. The committee believes that if the supply of small
sizes were limited early in the season, prices could be stabilized at a
higher level. This would provide increased returns for growers. In
addition, if more small grapefruit were allowed to remain on the tree
to increase in size and maturity, it could provide greater returns to
growers.
The committee surveyed shipment data covering the 11 week
regulatory period for the last four seasons and examined tables
outlining weekly f.o.b. figures for each size. The committee believes
that if shipments of small sizes could be maintained at around 250,000
cartons a week, prices should stabilize and demand for larger, more
profitable sizes should increase. The weekly percentage of 25 percent,
when combined with the average weekly shipments for the total industry,
would provide a total industry allotment of 244,195 cartons of sizes 48
and/or 56 red seedless grapefruit per regulated week. A stabilized
price that returns a fair market value would be beneficial to both
small and large growers and handlers.
This rule may require more selective picking of only the sizes
desired, something that many growers are doing already. The UF-IFAS
study indicated that returns could increase if growers would harvest
selectively and return to repick groves as the grapefruit sized. This
also would allow growers to maximize returns on fresh grapefruit by not
picking unprofitable grades and sizes of red grapefruit that would be
sent to the less profitable processing market. The study indicated that
selective harvesting can reduce the f.o.b. cost per carton. The study
also indicates that increasing minimum size restrictions could help to
raise returns.
Fifty-nine percent of red seedless grapefruit is shipped to fresh
market channels. There is a processing outlet for grapefruit not sold
into the fresh market. However, the vast majority of processing is
squeezing the grapefruit for juice. Because of the properties of the
juice of red seedless grapefruit, including problems with color, the
processing outlet is limited, and not currently profitable. Therefore,
it is essential that the market for fresh red grapefruit be fostered
and maintained. Any costs associated with this action would only be for
the 11 week regulatory period. However, benefits from this action could
stretch throughout the entire 33 week season. Even if this action was
successful only in raising returns a few pennies a carton, when applied
to 34 million cartons of red seedless grapefruit shipped to the fresh
market, the benefits should more than outweigh the costs.
The limits that would be established under this action would be
based on percentages applied to a handler's average week. This process
was established by the committee because it was the most equitable.
Also, all handlers would have access to loans and transfers. All
handlers and growers would benefit from increased returns. The costs or
benefits of this rule are not expected to be disproportionately more or
less for small handlers or growers than for larger entities.
[[Page 40487]]
The committee discussed alternatives to this action. The committee
discussed eliminating shipments of size 56 grapefruit all together.
Several members expressed that there is a market for size 56
grapefruit. Members favored the percentage rule recommended because it
would supply a sufficient quantity of small sizes should there be a
demand for size 56. Therefore, the motion to eliminate size 56 was
rejected. Another alternative discussed was to do nothing. However, the
committee rejected this option, taking in account that returns would
remain stagnant without action.
This rule would change the requirements under the Florida citrus
marketing order. Handlers utilizing the flexibility of the loan and
transfer aspects of this action would be required to submit a form to
the committee. The rule would increase the reporting burden on
approximately 80 handlers of red seedless grapefruit who would be
taking about 0.03 hour to complete each report regarding allotment
loans or transfers. The information collection requirements contained
in this section have been approved by the Office of Management and
Budget (OMB) under the provisions of the Paperwork Reduction Act of
1995 (Pub. L. 104-13) and assigned OMB number 0581-0094. 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. However, red
seedless grapefruit must meet the requirements as specified in the U.S.
Standards for Grades of Florida Grapefruit (7 CFR 51.760 through
51.784) issued under the Agricultural Marketing Act of 1946
(7 U.S.C. 1621 through 1627).
In addition, the committee's meeting was widely publicized
throughout the citrus industry and all interested persons were invited
to attend the meeting and participate in Committee deliberations on all
issues. Like all Committee meetings, the May 28, 1997, meeting was a
public meeting and all entities, both large and small, were able to
express views on this issue. Interested persons are invited to submit
information on the regulatory and informational impacts of this action
on small businesses.
A 15-day comment period is provided to allow interested persons to
respond to this proposal. Fifteen days is deemed appropriate because
this rule would need to be in place as soon as possible since handlers
will begin shipping grapefruit in September. In addition, because of
the nature of this rule, handlers need time to consider their allotment
and how best to service their customers. Also, the industry has been
discussing this issue for some time. The committee has kept the
industry well informed on this issue. It has also been widely discussed
at various industry and association meetings. Interested persons have
had time to determine and express their positions. All written comments
timely received will be considered before a final determination is made
on this matter.
List of Subjects in 7 CFR Part 905
Grapefruit, Marketing agreements, Oranges, Reporting and
recordkeeping requirements, Tangelos, Tangerines.
For the reasons set forth in the preamble, 7 CFR part 905 is
proposed to be amended as follows:
PART 905--ORANGES, GRAPEFRUIT, TANGERINES, AND TANGELOS GROWN IN
FLORIDA
1. The authority citation for 7 CFR Part 905 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
2. In Sec. 905.306, paragraphs (a) and (b), the word ``During'' is
removed and the words ``Except as otherwise provided in section
905.601, during'' are added in its place.
3. A new Sec. 905.601 is added to read as follows:
Sec. 905.601 Red seedless grapefruit regulation 101.
The schedule below establishes the weekly percentages to be used to
calculate each handler's weekly allotment of small sizes. If the
minimum size in effect under section 905.306 for red seedless
grapefruit is size 56, handlers can fill their allotment with size 56,
size 48, or a combination of the two sizes such that the total of these
shipments are within the established weekly limits. If the minimum size
in effect under section 905.306 for red seedless grapefruit is 48,
handlers can fill their allotment with size 48 red seedless grapefruit
such that the total of these shipments are within the established
weekly limits. The weekly percentages for sizes 48 and/or 56 red
seedless grapefruit grown in Florida, which may be handled during the
specified weeks are as follows:
------------------------------------------------------------------------
Weekly
Week percentage
------------------------------------------------------------------------
(a) 9/15/97 through 9/21/97................................. 25
(b) 9/22/97 through 9/28/97................................. 25
(c) 9/29/97 through 10/5/97................................. 25
(d) 10/6/97 through 10/12/97................................ 25
(e) 10/13/97 through 10/19/97............................... 25
(f) 10/20/97 through 10/26/97............................... 25
(g) 10/27/97 through 11/2/97................................ 25
(h) 11/3/97 through 11/9/97................................. 25
(i) 11/10/97 through 11/16/97............................... 25
(j) 11/17/97 through 11/23/97............................... 25
(k) 11/24/97 through 11/30/97............................... 25
------------------------------------------------------------------------
Dated: July 25, 1997.
Ronald L. Cioffi,
Acting Director, Fruit and Vegetable Division, Agricultural Marketing
Service.
[FR Doc. 97-20034 Filed 7-25-97; 1:13 pm]
BILLING CODE 3410-02-U
