Tart Cherries Grown in the States of Michigan, et al.; Final Free and Restricted Percentages for the 2005-2006 Crop Year for Tart Cherries, 1915-1919 [06-273]

Download as PDF 1915 Rules and Regulations Federal Register Vol. 71, No. 8 Thursday, January 12, 2006 This section of the FEDERAL REGISTER contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510. The Code of Federal Regulations is sold by the Superintendent of Documents. Prices of new books are listed in the first FEDERAL REGISTER issue of each week. DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 930 [Docket No. FV05–930–1 FR] Tart Cherries Grown in the States of Michigan, et al.; Final Free and Restricted Percentages for the 2005– 2006 Crop Year for Tart Cherries Agricultural Marketing Service, USDA. ACTION: Final rule. rwilkins on PROD1PC63 with RULES AGENCY: SUMMARY: This rule establishes final free and restricted percentages for the 2005– 2006 crop year. The percentages are 58 percent free and 42 percent restricted and will establish the proportion of cherries from the 2005 crop which may be handled in commercial outlets. The percentages are intended to stabilize supplies and prices, and strengthen market conditions. The percentages were recommended by the Cherry Industry Administrative Board (Board), the body that locally administers the marketing order. The marketing order regulates the handling of tart cherries grown in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin. EFFECTIVE DATE: January 13, 2006. This final rule applies to all 2005–2006 crop year restricted cherries until they are properly disposed of in accordance with marketing order requirements. FOR FURTHER INFORMATION CONTACT: Patricia A. Petrella or Kenneth G. Johnson, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, Unit 155, 4700 River Road, Riverdale, MD 20737; Telephone: (301) 734–5243, or Fax: (301) 734–5275; or George Kelhart, Technical Advisor, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW. STOP 0237, VerDate Aug<31>2005 15:48 Jan 11, 2006 Jkt 205001 Washington, DC 20250–0237; Telephone: (202) 720–2491, or Fax: (202) 720–8938. Small businesses may request information on complying with this regulation, or obtain a guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders by contacting Jay Guerber, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW. STOP 0237, Washington, DC 20250–0237; Telephone: (202) 720– 2491, Fax: (202) 720–8938, or e-mail: Jay.Guerber@usda.gov. SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing Agreement and Order No. 930 (7 CFR part 930), regulating the handling of tart cherries produced in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin, hereinafter referred to as the ‘‘order.’’ The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601–674), hereinafter referred to as the ‘‘Act.’’ The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Order 12866. This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the marketing order provisions now in effect, final free and restricted percentages may be established for tart cherries handled by handlers during the crop year. This rule establishes final free and restricted percentages for tart cherries for the 2005–2006 crop year, beginning July 1, 2005, through June 30, 2006. 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 exempt therefrom. Such 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 PO 00000 Frm 00001 Fmt 4700 Sfmt 4700 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 an action is filed not later than 20 days after the date of the entry of the ruling. The order prescribes procedures for computing an optimum supply and preliminary and final percentages that establish the amount of tart cherries that can be marketed throughout the season. The regulations apply to all handlers of tart cherries that are in the regulated districts. Tart cherries in the free percentage category may be shipped immediately to any market, while restricted percentage tart cherries must be held by handlers in a primary or secondary reserve, or be diverted in accordance with § 930.59 of the order and § 930.159 of the regulations, or used for exempt purposes (to obtain diversion credit) under § 930.62 of the order and § 930.162 of the regulations. The regulated Districts for this season are: District one—Northern Michigan; District two—Central Michigan; District three—Southwest Michigan; District four—New York; District seven—Utah; District eight—Washington, and District nine—Wisconsin. Districts five and six (Oregon and Pennsylvania, respectively) will not be regulated for the 2005–2006 season. The order prescribes under § 930.52 that those districts to be regulated shall be those districts in which the average annual production of cherries over the prior three years has exceeded six million pounds. A district not meeting the six million-pound requirement shall not be regulated in such crop year. Because this requirement was not met in the Districts of Oregon and Pennsylvania, handlers in those districts will not be subject to volume regulation during the 2005–2006 crop year. Demand for tart cherries at the farm level is derived from the demand for tart cherry products at retail. Demand for tart cherries and tart cherry products tend to be relatively stable from year to year. The supply of tart cherries, by contrast, varies greatly from crop year to crop year. The magnitude of annual fluctuations in tart cherry supplies is one of the most pronounced for any agricultural commodity in the United States. In addition, because tart cherries are processed either into cans or frozen, they can be stored and carried over from E:\FR\FM\12JAR1.SGM 12JAR1 1916 Federal Register / Vol. 71, No. 8 / Thursday, January 12, 2006 / Rules and Regulations crop year to crop year. This creates substantial coordination and marketing problems. The supply and demand for tart cherries is rarely balanced. The primary purpose of setting free and restricted percentages is to balance supply with demand, reduce large surpluses that may occur, and to assure adequate supplies in short crop production years. Section 930.50(a) of the order prescribes procedures for computing an optimum supply for each crop year. The Board must meet on or about July 1 of each crop year, to review sales data, inventory data, current crop forecasts and market conditions. The optimum supply volume shall be calculated as 100 percent of the average sales of the prior three years to which is added a desirable carryout inventory not to exceed 20 million pounds or such other amount as may be established with the approval of the Secretary. The optimum supply represents the desirable volume of tart cherries that should be available for sale in the coming crop year. The order also provides that on or about July 1 of each crop year, the Board is required to establish preliminary free and restricted percentages. These percentages are computed by deducting the actual carryin inventory from the optimum supply figure (adjusted to raw product equivalent—the actual weight of cherries handled to process into cherry products) and subtracting that figure from the current year’s USDA crop forecast. If the resulting number is positive, this represents the estimated over-production, which would be the restricted percentage tonnage. The restricted percentage tonnage is then divided by the sum of the USDA crop forecast or by an average of such other crop estimates for the regulated districts to obtain percentages for the regulated districts. The Board is required to establish a preliminary restricted percentage equal to the quotient, rounded to the nearest whole number, with the complement being the preliminary free tonnage percentage. If the tonnage requirements for the year are more than the USDA crop forecast, the Board is required to establish a preliminary free tonnage percentage of 100 percent and a preliminary restricted percentage of zero. The Board is required to announce the preliminary percentages in accordance with paragraph (h) of § 930.50. The Board met on June 23, 2005, and computed, for the 2005–2006 crop year, an optimum supply of 169 million pounds. The Board recommended that the desirable carryout figure be zero pounds. Desirable carryout is the amount of fruit required to be carried into the succeeding crop year and is set by the Board after considering market circumstances and needs. This figure can range from zero to a maximum of 20 million pounds, or such other amount, as the Board with the approval of the Secretary, may establish. The Board also recommended an economic adjustment of 16 million pounds to be subtracted from the surplus to recognize the decrease in the optimum supply formula which includes total production amounts from the 2002 crop disaster year. The Board calculated preliminary free and restricted percentages as follows: The USDA estimate of the crop for the entire production area was 244 million pounds; a 28 million pound carryin (based on Board estimates) was subtracted from the optimum supply of 169 pounds which resulted in 2005– 2006 tonnage requirements (adjusted optimum supply) of 141 million pounds. The carryin figure reflects the amount of cherries that handlers actually had in inventory at the beginning of the 2005–2006 crop year. Subtracting the adjusted optimum supply of 141 million pounds from the USDA crop estimate (244 million pounds) results in a surplus of 103 million pounds of tart cherries. An economic adjustment of 16 million pounds is subtracted from the 103 million pound surplus that leaves a total surplus of 87 million pounds. The surplus was divided by the production in the regulated districts (241 million pounds) and resulted in a restricted percentage of 36 percent for the 2005– 2006 crop year. The free percentage was 64 percent (100 percent minus 36 percent). The Board established these percentages and announced them to the industry as required by the order. The preliminary percentages were based on the USDA production estimate and the following supply and demand information available at the June meeting for the 2005–2006 year: Millions of pounds Optimum Supply Formula: (1) Average sales of the prior three years ................................................................................................................................... (2) Plus desirable carryout ........................................................................................................................................................... (3) Optimum supply calculated by the Board at the June meeting ............................................................................................. Preliminary Percentages: (4) USDA crop estimate ............................................................................................................................................................... (5) Plus carryin held by handlers as of July 1, 2003 ................................................................................................................... (6) Adjusted optimum supply for current crop year (Item 3 minus Item 5) ................................................................................. (7) Surplus (restricted tonnage) (Item 4 minus Item 6) ............................................................................................................... (8) Economic Adjustment ............................................................................................................................................................. (9) Surplus (Item 7 minus Item 8) ................................................................................................................................................ (10) USDA crop estimate for regulated districts .......................................................................................................................... Free rwilkins on PROD1PC63 with RULES (11) Preliminary percentages (Item 9 divided by Item 10 × 100 equals the restricted percentage; 100 minus the restricted percentage equals the free percentage) ..................................................................... Between July 1 and September 15 of each crop year, the Board may modify the preliminary free and restricted percentages by announcing interim free and restricted percentages to adjust to the actual pack occurring in the VerDate Aug<31>2005 15:48 Jan 11, 2006 Jkt 205001 industry. No modifications were made this crop year. USDA establishes final free and restricted percentages through the informal rulemaking process. These percentages make available the tart cherries necessary to achieve the PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 ........................ 169 0 169 ........................ 244 28 141 103 16 87 241 Restricted 64 36 optimum supply figure calculated by the Board. The difference between any final free percentage designated by the USDA and 100 percent is the final restricted percentage. The Board met on September 9, 2005, to recommend final free and restricted percentages. E:\FR\FM\12JAR1.SGM 12JAR1 1917 Federal Register / Vol. 71, No. 8 / Thursday, January 12, 2006 / Rules and Regulations The actual production reported by the Board was 267 million pounds, which is a 23 million pound increase from the USDA crop estimate of 244 million pounds. A 29 million pound carryin (based on handler reports) was subtracted from the Board’s optimum supply of 169 million pounds, yielding an adjusted optimum supply for the current crop year of 140 million pounds. The optimum supply of 140 million pounds was subtracted from the actual production of 267 million pounds, which resulted in a 127 million pound surplus. An economic adjustment of 16 million pounds was subtracted from the surplus to equal 111 million pounds of surplus tart cherries. The total surplus of 111 million pounds is divided by the 264 million-pound volume of tart cherries produced in the regulated districts. This results in a 42 percent restricted percentage and a corresponding 58 percent free percentage for the regulated districts. The final percentages are based on the Board’s reported production figures and the following supply and demand information available in September for the 2005–2006 crop year: Millions of pounds Optimum Supply Formula: (1) Average sales of the prior three years ................................................................................................................................... (2) Plus desirable carryout ........................................................................................................................................................... (3) Optimum supply calculated by the Board ............................................................................................................................... Preliminary Percentages: (4) Board reported production ...................................................................................................................................................... (5) Carryin held by handlers as of July 1, 2005 .......................................................................................................................... (6) Adjusted optimum supply (Item 3 minus Item 5) .................................................................................................................... (7) Surplus (restricted tonnage) (Item 4 minus Item 6) ............................................................................................................... (8) Economic Adjustment ............................................................................................................................................................. (9) Total Surplus (Item 7 minus Item 8) ....................................................................................................................................... (10) Production in regulated districts ........................................................................................................................................... 169 0 169 267 29 140 127 16 111 264 Percentages Free rwilkins on PROD1PC63 with RULES (11) Final percentages (Item 9 divided by Item 10 × 100 equals the restricted percentage; 100 minus the restricted percentage equals the free percentage) ...................................................................................... USDA’s ‘‘Guidelines for Fruit, Vegetable, and Specialty Crop Marketing Orders’’ specify that 110 percent of recent years’ sales should be made available to primary markets each season before recommendations for volume regulation are approved. This goal will be met by this action which releases 100 percent of the optimum supply and the additional release of tart cherries provided under for § 930.50(g). This release of tonnage, equal to 10 percent of the average sales of the prior three years sales, is made available to handlers each season. The Board recommended that such release should be made available to handlers the first week of December and the first week of May. Handlers can decide how much of the 10 percent release they would like to receive on the December and May release dates. Once released, such cherries are released for free use by such handler. Approximately 17 million pounds would be made available to handlers this season in accordance with USDA Guidelines. This release will be made available to every handler and released to such handler in proportion to the handler’s percentage of the total regulated crop handled. If a handler does not take his/her proportionate amount, such amount remains in the inventory reserve. VerDate Aug<31>2005 15:48 Jan 11, 2006 Jkt 205001 The Regulatory Flexibility Act and Effects on Small Businesses 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. Accordingly, AMS has prepared this final 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 40 handlers of tart cherries who are subject to regulation under the tart cherry marketing order and approximately 900 producers of tart cherries in the regulated area. Small agricultural service firms, which includes handlers, have been defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts of less than $6,000,000, and small agricultural producers are defined as those having annual receipts of less than $750,000. A majority of the producers PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 Restricted 58 42 and handlers are considered small entities under SBA’s standards. The principal demand for tart cherries is in the form of processed products. Tart cherries are dried, frozen, canned, juiced, and pureed. During the period 2000/2001 through 2004/2005, approximately 93.4 percent of the U.S. tart cherry crop, or 216.8 million pounds, was processed annually. Of the 216.8 million pounds of tart cherries processed, 59 percent was frozen, 28 percent was canned, and 13 percent was utilized for juice and other products. Based on National Agricultural Statistics Service data, acreage in the United States devoted to tart cherry production has been trending downward. Bearing acreage has declined from a high of 50,050 acres in 1987/88 to 36,950 acres in 2004/2005. This represents a 26 percent decrease in total bearing acres. Michigan leads the nation in tart cherry acreage with 73 percent of the total and produces about 70 percent of the U.S. tart cherry crop each year. The 2005/2006 crop is relatively large in size at 266.7 million pounds. This is the highest level of production since the 2001/2002 crop. The largest crop occurred in 1995/1996 with production in the regulated districts reaching a record 395.6 million pounds. The price per pound received by tart cherry growers ranged from a low of 7.3 cents E:\FR\FM\12JAR1.SGM 12JAR1 rwilkins on PROD1PC63 with RULES 1918 Federal Register / Vol. 71, No. 8 / Thursday, January 12, 2006 / Rules and Regulations in 1987 to a high of 46.4 cents in 1991. Wide supply and price fluctuations in the tart cherry industry are national in scope and impact. Growers testified during the order promulgation process that the prices they received often did not come close to covering the costs of production. The industry demonstrated a need for an order during the promulgation process of the marketing order because large variations in annual tart cherry supplies tend to lead to fluctuations in prices and disorderly marketing. As a result of these fluctuations in supply and price, growers realize less income. The industry chose a volume control marketing order to even out these wide variations in supply and improve returns to growers. During the promulgation process, proponents testified that small growers and processors would have the most to gain from implementation of a marketing order because many such growers and handlers had been going out of business due to low tart cherry prices. They also testified that, since an order would help increase grower returns, this should increase the buffer between business success and failure because small growers and handlers tend to be less capitalized than larger growers and handlers. Aggregate demand for tart cherries and tart cherry products tends to be relatively stable from year-to-year. Similarly, prices at the retail level show minimal variation. Consumer prices in grocery stores, and particularly in food service markets, largely do not reflect fluctuations in cherry supplies. Retail demand is assumed to be highly inelastic which indicates that price reductions do not result in large increases in the quantity demanded. Most tart cherries are sold to food service outlets and to consumers as pie filling; frozen cherries are sold as an ingredient to manufacturers of pies and cherry desserts. Juice and dried cherries are expanding market outlets for tart cherries. Demand for tart cherries at the farm level is derived from the demand for tart cherry products at retail. In general, the farm-level demand for a commodity consists of the demand at retail or food service outlets minus per-unit processing and distribution costs incurred in transforming the raw farm commodity into a product available to consumers. These costs comprise what is known as the ‘‘marketing margin.’’ The supply of tart cherries, by contrast, varies greatly. The magnitude of annual fluctuations in tart cherry supplies is one of the most pronounced for any agricultural commodity in the VerDate Aug<31>2005 15:48 Jan 11, 2006 Jkt 205001 United States. In addition, since tart cherries are processed either into cans or frozen, they can be stored and carried over from year-to-year. This creates substantial coordination and marketing problems. The supply and demand for tart cherries is rarely in equilibrium. As a result, grower prices fluctuate widely, reflecting the large swings in annual supplies. In an effort to stabilize prices, the tart cherry industry uses the volume control mechanisms under the authority of the Federal marketing order. This authority allows the industry to set free and restricted percentages. These restricted percentages are only applied to states or districts with a 3-year average of production greater than six million pounds, and to states or districts in which the production is 50 percent or more of the previous 5-year processed production average. The primary purpose of setting restricted percentages is an attempt to bring supply and demand into balance. If the primary market is over-supplied with cherries, grower prices decline substantially. The tart cherry sector uses an industry-wide storage program as a supplemental coordinating mechanism under the Federal marketing order. The primary purpose of the storage program is to warehouse supplies in large crop years in order to supplement supplies in short crop years. The storage approach is feasible because the increase in price—when moving from a large crop to a short crop year—more than offsets the costs for storage, interest, and handling of the stored cherries. The price that growers receive for their crop is largely determined by the total production volume and carrying inventories. The Federal marketing order permits the industry to exercise supply control provisions, which allow for the establishment of free and restricted percentages for the primary market, and a storage program. The establishment of restricted percentages impacts the production to be marketed in the primary market, while the storage program has an impact on the volume of unsold inventories. The volume control mechanism used by the cherry industry results in decreased shipments to primary markets. Without volume control the primary markets would likely be oversupplied, resulting in lower grower prices. To assess the impact that volume control has on the prices growers receive for their product, an econometric model has been developed. The econometric model provides a way to see what impacts volume control may PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 have on grower prices. The three districts in Michigan, along with the districts in Utah, New York, Washington, and Wisconsin are the restricted areas for this crop year and their combined total production is 264 million pounds. A 42 percent restriction means 185 million pounds is available to be shipped to primary markets. In addition, USDA requires a 10 percent release from reserves as a market growth factor. This results in an additional 17 million pounds being available for the primary market. A total of 202 million pounds are available for primary market sales. The econometric model is used to estimate grower prices with and without regulation. Without the volume controls, grower prices are estimated to be approximately $0.08 higher than without volume controls. The use of volume controls is estimated to have a positive impact on growers’ total revenues. With restriction, revenues are estimated to be $3.9 million higher than without restrictions. The without restrictions scenario assumes that all tart cherries produced would be delivered to processors for payments. It is concluded that the 42 percent volume control would not unduly burden producers, particularly smaller growers. The 42 percent restriction would be applied to the growers in Michigan, New York, Utah, Washington, and Wisconsin. The growers and handlers in the other two states covered under the marketing order will benefit from this restriction. Without the use of volume controls, the industry could be expected to start to build large amounts of unwanted inventories. These inventories have a depressing effect on grower prices. The econometric model shows for every 1 million-pound increase in carrying inventories, a decrease in grower prices of $0.0033 per pound occurs. The use of volume controls allows the industry to supply the primary markets while avoiding the disastrous results of oversupplying these markets. In addition, through volume control, the industry has an additional supply of cherries that can be used to develop secondary markets such as exports and the development of new products. The use of reserve cherries in the production shortened 2002–2003 crop year proved to be very useful and beneficial to growers and packers. In discussing the possibility of marketing percentages for the 2005– 2006 crop year, the Board considered the following factors contained in the marketing policy: (1) The estimated total production of tart cherries; (2) the E:\FR\FM\12JAR1.SGM 12JAR1 rwilkins on PROD1PC63 with RULES Federal Register / Vol. 71, No. 8 / Thursday, January 12, 2006 / Rules and Regulations estimated size of the crop to be handled; (3) the expected general quality of such cherry production; (4) the expected carryover as of July 1 of canned and frozen cherries and other cherry products; (5) the expected demand conditions for cherries in different market segments; (6) supplies of competing commodities; (7) an analysis of economic factors having a bearing on the marketing of cherries; (8) the estimated tonnage held by handlers in primary or secondary inventory reserves; and (9) any estimated release of primary or secondary inventory reserve cherries during the crop year. The Board’s review of the factors resulted in the computation and announcement in September 2005 of the free and restricted percentages established by this rule (58 percent free and 42 percent restricted). One alternative to this action would be not to have volume regulation this season. Board members stated that no volume regulation would be detrimental to the tart cherry industry due to the size of the 2005–2006 crop. As mentioned earlier, the USDA’s ‘‘Guidelines for Fruit, Vegetable, and Specialty Crop Marketing Orders’’ specify that 110 percent of recent years’ sales should be made available to primary markets each season before recommendations for volume regulation are approved. The quantity available under this rule is 110 percent of the quantity shipped in the prior three years. The free and restricted percentages established by this rule release the optimum supply and apply uniformly to all regulated handlers in the industry, regardless of size. There are no known additional costs incurred by small handlers that are not incurred by large handlers. The stabilizing effects of the percentages impact all handlers positively by helping them maintain and expand markets, despite seasonal supply fluctuations. Likewise, price stability positively impacts all producers by allowing them to better anticipate the revenues their tart cherries will generate. USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this regulation. While the benefits resulting from this rulemaking are difficult to quantify, the stabilizing effects of the volume regulations impact both small and large handlers positively by helping them maintain markets even though tart cherry supplies fluctuate widely from season to season. In compliance with Office of Management and Budget (OMB) regulations (5 CFR part 1320) which VerDate Aug<31>2005 15:48 Jan 11, 2006 Jkt 205001 implement the Paperwork Reduction Act of 1995 (Pub. L. 104–13), the information collection and recordkeeping requirements under the tart cherry marketing order have been previously approved by OMB and assigned OMB Number 0581–0177. Reporting and recordkeeping burdens are necessary for compliance purposes and for developing statistical data for maintenance of the program. The forms require information which is readily available from handler records and which can be provided without data processing equipment or trained statistical staff. As with other, similar marketing order programs, reports and forms are periodically studied to reduce or eliminate duplicate information collection burdens by industry and public sector agencies. This rule does not change those requirements. AMS is committed to compliance with the Government Paperwork Elimination Act (GPEA), which requires Government agencies in general to provide the public the option of submitting information or transacting business electronically to the maximum extent possible. A proposed rule concerning this action was published in the Federal Register on November 7, 2005 (70 FR 67375). Copies of the rule were mailed or sent via facsimile to all Board members and handlers. Finally, the rule was made available through the Internet by the Office of the Federal Register and USDA. A 30-day comment period ending December 7, 2005, was provided to allow interested persons to respond to the proposal. No comments were received. After consideration of all relevant matter presented, including the information and recommendation submitted by the Board and other available information, it is hereby found that this rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act. It is found that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register (5 U.S.C. 553) because handlers are already shipping tart cherries from the 2005–2006 crop. Further, handlers are aware of this rule, which was recommended at a public meeting. Also, a 30-day comment period was provided for in the proposed rule and no comments were received. List of Subjects in 7 CFR Part 930 Marketing agreements, Reporting and recordkeeping requirements, Tart cherries. PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 1919 For the reasons set forth in the preamble, 7 CFR part 930 is amended as follows: I PART 930—TART CHERRIES GROWN IN THE STATES OF MICHIGAN, NEW YORK, PENNSYLVANIA, OREGON, UTAH, WASHINGTON, AND WISCONSIN 1. The authority citation for 7 CFR part 930 continues to read as follows: I Authority: 7 U.S.C. 601–674. 2. Section 930.254 is added to read as follows: I Note: This section will not appear in the annual Code of Federal Regulations. § 930.254 Final free and restricted percentages for the 2005–2006 crop year. The final percentages for tart cherries handled by handlers during the crop year beginning on July 1, 2005, which shall be free and restricted, respectively, are designated as follows: Free percentage, 58 percent and restricted percentage, 42 percent. Dated: January 6, 2006. Lloyd C. Day, Administrator, Agricultural Marketing Service. [FR Doc. 06–273 Filed 1–11–06; 8:45 am] BILLING CODE 3410–02–P DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 946 [Docket No. FV05–946–3 FIR] Irish Potatoes Grown in Washington; Modification of Pack Requirements Agricultural Marketing Service, USDA. ACTION: Final rule. AGENCY: SUMMARY: The Department of Agriculture (USDA) is adopting, as a final rule, without change, an interim final rule that modified the pack requirements prescribed under the Washington potato marketing order. The marketing order regulates the handling of Irish potatoes grown in Washington, and is administered locally by the State of Washington Potato Committee (Committee). This rule continues in effect the action that modified the pack requirements to allow handlers to ship U.S. No. 2 grade potatoes in cartons to better meet buyer needs. Prior to this action, only potatoes grading U.S. No. 1 or better, or potatoes failing to grade U.S. No. 1 only because of internal defects, were allowed to be shipped in E:\FR\FM\12JAR1.SGM 12JAR1

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[Federal Register Volume 71, Number 8 (Thursday, January 12, 2006)]
[Rules and Regulations]
[Pages 1915-1919]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-273]



========================================================================
Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 
Prices of new books are listed in the first FEDERAL REGISTER issue of each 
week.

========================================================================


Federal Register / Vol. 71, No. 8 / Thursday, January 12, 2006 / 
Rules and Regulations

[[Page 1915]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Docket No. FV05-930-1 FR]


Tart Cherries Grown in the States of Michigan, et al.; Final Free 
and Restricted Percentages for the 2005-2006 Crop Year for Tart 
Cherries

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This rule establishes final free and restricted percentages 
for the 2005-2006 crop year. The percentages are 58 percent free and 42 
percent restricted and will establish the proportion of cherries from 
the 2005 crop which may be handled in commercial outlets. The 
percentages are intended to stabilize supplies and prices, and 
strengthen market conditions. The percentages were recommended by the 
Cherry Industry Administrative Board (Board), the body that locally 
administers the marketing order. The marketing order regulates the 
handling of tart cherries grown in the States of Michigan, New York, 
Pennsylvania, Oregon, Utah, Washington, and Wisconsin.

EFFECTIVE DATE: January 13, 2006. This final rule applies to all 2005-
2006 crop year restricted cherries until they are properly disposed of 
in accordance with marketing order requirements.

FOR FURTHER INFORMATION CONTACT: Patricia A. Petrella or Kenneth G. 
Johnson, Marketing Order Administration Branch, Fruit and Vegetable 
Programs, AMS, USDA, Unit 155, 4700 River Road, Riverdale, MD 20737; 
Telephone: (301) 734-5243, or Fax: (301) 734-5275; or George Kelhart, 
Technical Advisor, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW. STOP 0237, 
Washington, DC 20250-0237; Telephone: (202) 720-2491, or Fax: (202) 
720-8938. Small businesses may request information on complying with 
this regulation, or obtain a guide on complying with fruit, vegetable, 
and specialty crop marketing agreements and orders by contacting Jay 
Guerber, Marketing Order Administration Branch, Fruit and Vegetable 
Programs, AMS, USDA, 1400 Independence Avenue, SW. STOP 0237, 
Washington, DC 20250-0237; Telephone: (202) 720-2491, Fax: (202) 720-
8938, or e-mail: Jay.Guerber@usda.gov.

SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing 
Agreement and Order No. 930 (7 CFR part 930), regulating the handling 
of tart cherries produced in the States of Michigan, New York, 
Pennsylvania, Oregon, Utah, Washington, and Wisconsin, hereinafter 
referred to as the ``order.'' The order is effective under the 
Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-
674), hereinafter referred to as the ``Act.''
    The Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Order 12866.
    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. Under the marketing order provisions now in 
effect, final free and restricted percentages may be established for 
tart cherries handled by handlers during the crop year. This rule 
establishes final free and restricted percentages for tart cherries for 
the 2005-2006 crop year, beginning July 1, 2005, through June 30, 2006. 
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 exempt 
therefrom. Such handler is afforded the opportunity for a hearing on 
the petition. After the hearing, the Secretary would rule on the 
petition. The Act provides that the district court of the United States 
in any district in which the handler is an inhabitant, or has his or 
her principal place of business, has jurisdiction in equity to review 
the Secretary's ruling on the petition, provided an action is filed not 
later than 20 days after the date of the entry of the ruling.
    The order prescribes procedures for computing an optimum supply and 
preliminary and final percentages that establish the amount of tart 
cherries that can be marketed throughout the season. The regulations 
apply to all handlers of tart cherries that are in the regulated 
districts. Tart cherries in the free percentage category may be shipped 
immediately to any market, while restricted percentage tart cherries 
must be held by handlers in a primary or secondary reserve, or be 
diverted in accordance with Sec.  930.59 of the order and Sec.  930.159 
of the regulations, or used for exempt purposes (to obtain diversion 
credit) under Sec.  930.62 of the order and Sec.  930.162 of the 
regulations. The regulated Districts for this season are: District 
one--Northern Michigan; District two--Central Michigan; District 
three--Southwest Michigan; District four--New York; District seven--
Utah; District eight--Washington, and District nine--Wisconsin. 
Districts five and six (Oregon and Pennsylvania, respectively) will not 
be regulated for the 2005-2006 season.
    The order prescribes under Sec.  930.52 that those districts to be 
regulated shall be those districts in which the average annual 
production of cherries over the prior three years has exceeded six 
million pounds. A district not meeting the six million-pound 
requirement shall not be regulated in such crop year. Because this 
requirement was not met in the Districts of Oregon and Pennsylvania, 
handlers in those districts will not be subject to volume regulation 
during the 2005-2006 crop year.
    Demand for tart cherries at the farm level is derived from the 
demand for tart cherry products at retail. Demand for tart cherries and 
tart cherry products tend to be relatively stable from year to year. 
The supply of tart cherries, by contrast, varies greatly from crop year 
to crop year. The magnitude of annual fluctuations in tart cherry 
supplies is one of the most pronounced for any agricultural commodity 
in the United States. In addition, because tart cherries are processed 
either into cans or frozen, they can be stored and carried over from

[[Page 1916]]

crop year to crop year. This creates substantial coordination and 
marketing problems. The supply and demand for tart cherries is rarely 
balanced. The primary purpose of setting free and restricted 
percentages is to balance supply with demand, reduce large surpluses 
that may occur, and to assure adequate supplies in short crop 
production years.
    Section 930.50(a) of the order prescribes procedures for computing 
an optimum supply for each crop year. The Board must meet on or about 
July 1 of each crop year, to review sales data, inventory data, current 
crop forecasts and market conditions. The optimum supply volume shall 
be calculated as 100 percent of the average sales of the prior three 
years to which is added a desirable carryout inventory not to exceed 20 
million pounds or such other amount as may be established with the 
approval of the Secretary. The optimum supply represents the desirable 
volume of tart cherries that should be available for sale in the coming 
crop year.
    The order also provides that on or about July 1 of each crop year, 
the Board is required to establish preliminary free and restricted 
percentages. These percentages are computed by deducting the actual 
carryin inventory from the optimum supply figure (adjusted to raw 
product equivalent--the actual weight of cherries handled to process 
into cherry products) and subtracting that figure from the current 
year's USDA crop forecast. If the resulting number is positive, this 
represents the estimated over-production, which would be the restricted 
percentage tonnage. The restricted percentage tonnage is then divided 
by the sum of the USDA crop forecast or by an average of such other 
crop estimates for the regulated districts to obtain percentages for 
the regulated districts. The Board is required to establish a 
preliminary restricted percentage equal to the quotient, rounded to the 
nearest whole number, with the complement being the preliminary free 
tonnage percentage. If the tonnage requirements for the year are more 
than the USDA crop forecast, the Board is required to establish a 
preliminary free tonnage percentage of 100 percent and a preliminary 
restricted percentage of zero. The Board is required to announce the 
preliminary percentages in accordance with paragraph (h) of Sec.  
930.50.
    The Board met on June 23, 2005, and computed, for the 2005-2006 
crop year, an optimum supply of 169 million pounds. The Board 
recommended that the desirable carryout figure be zero pounds. 
Desirable carryout is the amount of fruit required to be carried into 
the succeeding crop year and is set by the Board after considering 
market circumstances and needs. This figure can range from zero to a 
maximum of 20 million pounds, or such other amount, as the Board with 
the approval of the Secretary, may establish.
    The Board also recommended an economic adjustment of 16 million 
pounds to be subtracted from the surplus to recognize the decrease in 
the optimum supply formula which includes total production amounts from 
the 2002 crop disaster year. The Board calculated preliminary free and 
restricted percentages as follows: The USDA estimate of the crop for 
the entire production area was 244 million pounds; a 28 million pound 
carryin (based on Board estimates) was subtracted from the optimum 
supply of 169 pounds which resulted in 2005-2006 tonnage requirements 
(adjusted optimum supply) of 141 million pounds. The carryin figure 
reflects the amount of cherries that handlers actually had in inventory 
at the beginning of the 2005-2006 crop year. Subtracting the adjusted 
optimum supply of 141 million pounds from the USDA crop estimate (244 
million pounds) results in a surplus of 103 million pounds of tart 
cherries. An economic adjustment of 16 million pounds is subtracted 
from the 103 million pound surplus that leaves a total surplus of 87 
million pounds. The surplus was divided by the production in the 
regulated districts (241 million pounds) and resulted in a restricted 
percentage of 36 percent for the 2005-2006 crop year. The free 
percentage was 64 percent (100 percent minus 36 percent). The Board 
established these percentages and announced them to the industry as 
required by the order.
    The preliminary percentages were based on the USDA production 
estimate and the following supply and demand information available at 
the June meeting for the 2005-2006 year:

------------------------------------------------------------------------
                                                           Millions  of
                                                              pounds
------------------------------------------------------------------------
Optimum Supply Formula:                                   ..............
    (1) Average sales of the prior three years..........             169
    (2) Plus desirable carryout.........................               0
    (3) Optimum supply calculated by the Board at the                169
     June meeting.......................................
Preliminary Percentages:                                  ..............
    (4) USDA crop estimate..............................             244
    (5) Plus carryin held by handlers as of July 1, 2003              28
    (6) Adjusted optimum supply for current crop year                141
     (Item 3 minus Item 5)..............................
    (7) Surplus (restricted tonnage) (Item 4 minus Item              103
     6).................................................
    (8) Economic Adjustment.............................              16
    (9) Surplus (Item 7 minus Item 8)...................              87
    (10) USDA crop estimate for regulated districts.....             241
------------------------------------------------------------------------


 
                                               Free         Restricted
------------------------------------------------------------------------
    (11) Preliminary percentages (Item 9              64              36
     divided by Item 10 x 100 equals the
     restricted percentage; 100 minus
     the restricted percentage equals
     the free percentage)...............
------------------------------------------------------------------------

    Between July 1 and September 15 of each crop year, the Board may 
modify the preliminary free and restricted percentages by announcing 
interim free and restricted percentages to adjust to the actual pack 
occurring in the industry. No modifications were made this crop year.
    USDA establishes final free and restricted percentages through the 
informal rulemaking process. These percentages make available the tart 
cherries necessary to achieve the optimum supply figure calculated by 
the Board. The difference between any final free percentage designated 
by the USDA and 100 percent is the final restricted percentage. The 
Board met on September 9, 2005, to recommend final free and restricted 
percentages.

[[Page 1917]]

    The actual production reported by the Board was 267 million pounds, 
which is a 23 million pound increase from the USDA crop estimate of 244 
million pounds.
    A 29 million pound carryin (based on handler reports) was 
subtracted from the Board's optimum supply of 169 million pounds, 
yielding an adjusted optimum supply for the current crop year of 140 
million pounds. The optimum supply of 140 million pounds was subtracted 
from the actual production of 267 million pounds, which resulted in a 
127 million pound surplus. An economic adjustment of 16 million pounds 
was subtracted from the surplus to equal 111 million pounds of surplus 
tart cherries. The total surplus of 111 million pounds is divided by 
the 264 million-pound volume of tart cherries produced in the regulated 
districts. This results in a 42 percent restricted percentage and a 
corresponding 58 percent free percentage for the regulated districts.
    The final percentages are based on the Board's reported production 
figures and the following supply and demand information available in 
September for the 2005-2006 crop year:

------------------------------------------------------------------------
                                                           Millions  of
                                                              pounds
------------------------------------------------------------------------
Optimum Supply Formula:
    (1) Average sales of the prior three years..........             169
    (2) Plus desirable carryout.........................               0
    (3) Optimum supply calculated by the Board..........             169
Preliminary Percentages:
    (4) Board reported production.......................             267
    (5) Carryin held by handlers as of July 1, 2005.....              29
    (6) Adjusted optimum supply (Item 3 minus Item 5)...             140
    (7) Surplus (restricted tonnage) (Item 4 minus Item              127
     6).................................................
    (8) Economic Adjustment.............................              16
    (9) Total Surplus (Item 7 minus Item 8).............             111
    (10) Production in regulated districts..............             264
------------------------------------------------------------------------


 
                                                    Percentages
                                         -------------------------------
                                               Free         Restricted
------------------------------------------------------------------------
    (11) Final percentages (Item 9                    58              42
     divided by Item 10 x 100 equals the
     restricted percentage; 100 minus
     the restricted percentage equals
     the free percentage)...............
------------------------------------------------------------------------

    USDA's ``Guidelines for Fruit, Vegetable, and Specialty Crop 
Marketing Orders'' specify that 110 percent of recent years' sales 
should be made available to primary markets each season before 
recommendations for volume regulation are approved. This goal will be 
met by this action which releases 100 percent of the optimum supply and 
the additional release of tart cherries provided under for Sec.  
930.50(g).
    This release of tonnage, equal to 10 percent of the average sales 
of the prior three years sales, is made available to handlers each 
season. The Board recommended that such release should be made 
available to handlers the first week of December and the first week of 
May. Handlers can decide how much of the 10 percent release they would 
like to receive on the December and May release dates. Once released, 
such cherries are released for free use by such handler. Approximately 
17 million pounds would be made available to handlers this season in 
accordance with USDA Guidelines. This release will be made available to 
every handler and released to such handler in proportion to the 
handler's percentage of the total regulated crop handled. If a handler 
does not take his/her proportionate amount, such amount remains in the 
inventory reserve.

The Regulatory Flexibility Act and Effects on Small Businesses

    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. Accordingly, AMS has 
prepared this final 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 40 handlers of tart cherries who are 
subject to regulation under the tart cherry marketing order and 
approximately 900 producers of tart cherries in the regulated area. 
Small agricultural service firms, which includes handlers, have been 
defined by the Small Business Administration (13 CFR 121.201) as those 
having annual receipts of less than $6,000,000, and small agricultural 
producers are defined as those having annual receipts of less than 
$750,000. A majority of the producers and handlers are considered small 
entities under SBA's standards.
    The principal demand for tart cherries is in the form of processed 
products. Tart cherries are dried, frozen, canned, juiced, and pureed. 
During the period 2000/2001 through 2004/2005, approximately 93.4 
percent of the U.S. tart cherry crop, or 216.8 million pounds, was 
processed annually. Of the 216.8 million pounds of tart cherries 
processed, 59 percent was frozen, 28 percent was canned, and 13 percent 
was utilized for juice and other products.
    Based on National Agricultural Statistics Service data, acreage in 
the United States devoted to tart cherry production has been trending 
downward. Bearing acreage has declined from a high of 50,050 acres in 
1987/88 to 36,950 acres in 2004/2005. This represents a 26 percent 
decrease in total bearing acres. Michigan leads the nation in tart 
cherry acreage with 73 percent of the total and produces about 70 
percent of the U.S. tart cherry crop each year.
    The 2005/2006 crop is relatively large in size at 266.7 million 
pounds. This is the highest level of production since the 2001/2002 
crop. The largest crop occurred in 1995/1996 with production in the 
regulated districts reaching a record 395.6 million pounds. The price 
per pound received by tart cherry growers ranged from a low of 7.3 
cents

[[Page 1918]]

in 1987 to a high of 46.4 cents in 1991. Wide supply and price 
fluctuations in the tart cherry industry are national in scope and 
impact. Growers testified during the order promulgation process that 
the prices they received often did not come close to covering the costs 
of production.
    The industry demonstrated a need for an order during the 
promulgation process of the marketing order because large variations in 
annual tart cherry supplies tend to lead to fluctuations in prices and 
disorderly marketing. As a result of these fluctuations in supply and 
price, growers realize less income. The industry chose a volume control 
marketing order to even out these wide variations in supply and improve 
returns to growers. During the promulgation process, proponents 
testified that small growers and processors would have the most to gain 
from implementation of a marketing order because many such growers and 
handlers had been going out of business due to low tart cherry prices. 
They also testified that, since an order would help increase grower 
returns, this should increase the buffer between business success and 
failure because small growers and handlers tend to be less capitalized 
than larger growers and handlers.
    Aggregate demand for tart cherries and tart cherry products tends 
to be relatively stable from year-to-year. Similarly, prices at the 
retail level show minimal variation. Consumer prices in grocery stores, 
and particularly in food service markets, largely do not reflect 
fluctuations in cherry supplies. Retail demand is assumed to be highly 
inelastic which indicates that price reductions do not result in large 
increases in the quantity demanded. Most tart cherries are sold to food 
service outlets and to consumers as pie filling; frozen cherries are 
sold as an ingredient to manufacturers of pies and cherry desserts. 
Juice and dried cherries are expanding market outlets for tart 
cherries.
    Demand for tart cherries at the farm level is derived from the 
demand for tart cherry products at retail. In general, the farm-level 
demand for a commodity consists of the demand at retail or food service 
outlets minus per-unit processing and distribution costs incurred in 
transforming the raw farm commodity into a product available to 
consumers. These costs comprise what is known as the ``marketing 
margin.''
    The supply of tart cherries, by contrast, varies greatly. The 
magnitude of annual fluctuations in tart cherry supplies is one of the 
most pronounced for any agricultural commodity in the United States. In 
addition, since tart cherries are processed either into cans or frozen, 
they can be stored and carried over from year-to-year. This creates 
substantial coordination and marketing problems. The supply and demand 
for tart cherries is rarely in equilibrium. As a result, grower prices 
fluctuate widely, reflecting the large swings in annual supplies.
    In an effort to stabilize prices, the tart cherry industry uses the 
volume control mechanisms under the authority of the Federal marketing 
order. This authority allows the industry to set free and restricted 
percentages. These restricted percentages are only applied to states or 
districts with a 3-year average of production greater than six million 
pounds, and to states or districts in which the production is 50 
percent or more of the previous 5-year processed production average.
    The primary purpose of setting restricted percentages is an attempt 
to bring supply and demand into balance. If the primary market is over-
supplied with cherries, grower prices decline substantially.
    The tart cherry sector uses an industry-wide storage program as a 
supplemental coordinating mechanism under the Federal marketing order. 
The primary purpose of the storage program is to warehouse supplies in 
large crop years in order to supplement supplies in short crop years. 
The storage approach is feasible because the increase in price--when 
moving from a large crop to a short crop year--more than offsets the 
costs for storage, interest, and handling of the stored cherries.
    The price that growers receive for their crop is largely determined 
by the total production volume and carrying inventories. The Federal 
marketing order permits the industry to exercise supply control 
provisions, which allow for the establishment of free and restricted 
percentages for the primary market, and a storage program. The 
establishment of restricted percentages impacts the production to be 
marketed in the primary market, while the storage program has an impact 
on the volume of unsold inventories.
    The volume control mechanism used by the cherry industry results in 
decreased shipments to primary markets. Without volume control the 
primary markets would likely be over-supplied, resulting in lower 
grower prices.
    To assess the impact that volume control has on the prices growers 
receive for their product, an econometric model has been developed. The 
econometric model provides a way to see what impacts volume control may 
have on grower prices. The three districts in Michigan, along with the 
districts in Utah, New York, Washington, and Wisconsin are the 
restricted areas for this crop year and their combined total production 
is 264 million pounds. A 42 percent restriction means 185 million 
pounds is available to be shipped to primary markets.
    In addition, USDA requires a 10 percent release from reserves as a 
market growth factor. This results in an additional 17 million pounds 
being available for the primary market. A total of 202 million pounds 
are available for primary market sales.
    The econometric model is used to estimate grower prices with and 
without regulation. Without the volume controls, grower prices are 
estimated to be approximately $0.08 higher than without volume 
controls.
    The use of volume controls is estimated to have a positive impact 
on growers' total revenues. With restriction, revenues are estimated to 
be $3.9 million higher than without restrictions. The without 
restrictions scenario assumes that all tart cherries produced would be 
delivered to processors for payments.
    It is concluded that the 42 percent volume control would not unduly 
burden producers, particularly smaller growers. The 42 percent 
restriction would be applied to the growers in Michigan, New York, 
Utah, Washington, and Wisconsin. The growers and handlers in the other 
two states covered under the marketing order will benefit from this 
restriction.
    Without the use of volume controls, the industry could be expected 
to start to build large amounts of unwanted inventories. These 
inventories have a depressing effect on grower prices. The econometric 
model shows for every 1 million-pound increase in carrying inventories, 
a decrease in grower prices of $0.0033 per pound occurs. The use of 
volume controls allows the industry to supply the primary markets while 
avoiding the disastrous results of over-supplying these markets. In 
addition, through volume control, the industry has an additional supply 
of cherries that can be used to develop secondary markets such as 
exports and the development of new products. The use of reserve 
cherries in the production shortened 2002-2003 crop year proved to be 
very useful and beneficial to growers and packers.
    In discussing the possibility of marketing percentages for the 
2005-2006 crop year, the Board considered the following factors 
contained in the marketing policy: (1) The estimated total production 
of tart cherries; (2) the

[[Page 1919]]

estimated size of the crop to be handled; (3) the expected general 
quality of such cherry production; (4) the expected carryover as of 
July 1 of canned and frozen cherries and other cherry products; (5) the 
expected demand conditions for cherries in different market segments; 
(6) supplies of competing commodities; (7) an analysis of economic 
factors having a bearing on the marketing of cherries; (8) the 
estimated tonnage held by handlers in primary or secondary inventory 
reserves; and (9) any estimated release of primary or secondary 
inventory reserve cherries during the crop year.
    The Board's review of the factors resulted in the computation and 
announcement in September 2005 of the free and restricted percentages 
established by this rule (58 percent free and 42 percent restricted).
    One alternative to this action would be not to have volume 
regulation this season. Board members stated that no volume regulation 
would be detrimental to the tart cherry industry due to the size of the 
2005-2006 crop.
    As mentioned earlier, the USDA's ``Guidelines for Fruit, Vegetable, 
and Specialty Crop Marketing Orders'' specify that 110 percent of 
recent years' sales should be made available to primary markets each 
season before recommendations for volume regulation are approved. The 
quantity available under this rule is 110 percent of the quantity 
shipped in the prior three years.
    The free and restricted percentages established by this rule 
release the optimum supply and apply uniformly to all regulated 
handlers in the industry, regardless of size. There are no known 
additional costs incurred by small handlers that are not incurred by 
large handlers. The stabilizing effects of the percentages impact all 
handlers positively by helping them maintain and expand markets, 
despite seasonal supply fluctuations. Likewise, price stability 
positively impacts all producers by allowing them to better anticipate 
the revenues their tart cherries will generate.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap, or conflict with this regulation.
    While the benefits resulting from this rulemaking are difficult to 
quantify, the stabilizing effects of the volume regulations impact both 
small and large handlers positively by helping them maintain markets 
even though tart cherry supplies fluctuate widely from season to 
season.
    In compliance with Office of Management and Budget (OMB) 
regulations (5 CFR part 1320) which implement the Paperwork Reduction 
Act of 1995 (Pub. L. 104-13), the information collection and 
recordkeeping requirements under the tart cherry marketing order have 
been previously approved by OMB and assigned OMB Number 0581-0177.
    Reporting and recordkeeping burdens are necessary for compliance 
purposes and for developing statistical data for maintenance of the 
program. The forms require information which is readily available from 
handler records and which can be provided without data processing 
equipment or trained statistical staff. As with other, similar 
marketing order programs, reports and forms are periodically studied to 
reduce or eliminate duplicate information collection burdens by 
industry and public sector agencies. This rule does not change those 
requirements.
    AMS is committed to compliance with the Government Paperwork 
Elimination Act (GPEA), which requires Government agencies in general 
to provide the public the option of submitting information or 
transacting business electronically to the maximum extent possible.
    A proposed rule concerning this action was published in the Federal 
Register on November 7, 2005 (70 FR 67375). Copies of the rule were 
mailed or sent via facsimile to all Board members and handlers. 
Finally, the rule was made available through the Internet by the Office 
of the Federal Register and USDA. A 30-day comment period ending 
December 7, 2005, was provided to allow interested persons to respond 
to the proposal. No comments were received.
    After consideration of all relevant matter presented, including the 
information and recommendation submitted by the Board and other 
available information, it is hereby found that this rule, as 
hereinafter set forth, will tend to effectuate the declared policy of 
the Act.
    It is found that good cause exists for not postponing the effective 
date of this rule until 30 days after publication in the Federal 
Register (5 U.S.C. 553) because handlers are already shipping tart 
cherries from the 2005-2006 crop. Further, handlers are aware of this 
rule, which was recommended at a public meeting. Also, a 30-day comment 
period was provided for in the proposed rule and no comments were 
received.

List of Subjects in 7 CFR Part 930

    Marketing agreements, Reporting and recordkeeping requirements, 
Tart cherries.

0
For the reasons set forth in the preamble, 7 CFR part 930 is amended as 
follows:

PART 930--TART CHERRIES GROWN IN THE STATES OF MICHIGAN, NEW YORK, 
PENNSYLVANIA, OREGON, UTAH, WASHINGTON, AND WISCONSIN

0
1. The authority citation for 7 CFR part 930 continues to read as 
follows:

    Authority: 7 U.S.C. 601-674.

0
2. Section 930.254 is added to read as follows:

    Note: This section will not appear in the annual Code of Federal 
Regulations.

Sec.  930.254  Final free and restricted percentages for the 2005-2006 
crop year.

    The final percentages for tart cherries handled by handlers during 
the crop year beginning on July 1, 2005, which shall be free and 
restricted, respectively, are designated as follows: Free percentage, 
58 percent and restricted percentage, 42 percent.

    Dated: January 6, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 06-273 Filed 1-11-06; 8:45 am]
BILLING CODE 3410-02-P

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