Tart Cherries Grown in the States of Michigan, et al.; Final Free and Restricted Percentages for the 2006-2007 Crop Year for Tart Cherries, 13674-13679 [E7-5313]
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Federal Register / Vol. 72, No. 56 / Friday, March 23, 2007 / Rules and Regulations
sector agencies. In addition, as noted in
the initial regulatory flexibility analysis,
USDA has not identified any relevant
Federal rules that duplicate, overlap, or
conflict with this rule.
Further, the committees’ meetings
were widely publicized throughout the
nectarine and peach industries and all
interested persons were invited to
attend the meetings and participate in
committee deliberations. Like all
committee meetings, the August 31,
2006, meetings were public meetings
and all entities, both large and small,
were able to express their views on
these issues.
An interim final rule concerning this
action was published in the Federal
Register on December 28, 2006. The rule
was posted on CTFA’s website. In
addition, the rule was made available
through the Internet by USDA and the
Office of the Federal Register. That rule
provided for a 60-day comment period,
which ended on February 26, 2007. One
comment supporting the actions was
received. The commenter stated that the
actions accurately reflected the
industries’ desire to bring the orders’
rules and regulations into conformance
with the amended order provisions.
The AMS is committed to complying
with the E-Government Act, to promote
the use of the Internet and other
information technologies to provide
increased opportunities for citizen
access to Government information and
services, and for other purposes.
A small business guide on complying
with fruit, vegetable, and specialty crop
marketing agreements and orders may
be viewed at the following Web site:
https://www.ams.usda.gov/fv/moab.html.
Any questions about the compliance
guide should be sent to Jay Guerber at
the previously mentioned address in the
FOR FURTHER INFORMATION CONTACT
section.
After consideration of all relevant
matters presented, the information and
recommendations submitted by the
committees, and other information, it is
found that finalizing the interim final
rule, without change, as published in
the Federal Register (71 FR 78038,
December 28, 2006), will tend to
effectuate the declared policy of the Act.
List of Subjects
sroberts on PROD1PC70 with RULES
7 CFR Part 916
Marketing agreements, Nectarines,
Reporting and recordkeeping
requirements.
7 CFR Part 917
Marketing agreements, Peaches, Pears,
Reporting and recordkeeping
requirements.
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PART 916—NECTARINES GROWN IN
CALIFORNIA
PART 917—FRESH PEARS AND
PEACHES GROWN IN CALIFORNIA
Accordingly, the interim final rule
amending 7 CFR parts 916 and 917,
which was published at 71 FR 78038 on
December 28, 2006, is adopted as a final
rule without change.
I
Dated: March 19, 2007.
Lloyd C. Day,
Administrator, Agricultural Marketing
Service.
[FR Doc. E7–5311 Filed 3–22–07; 8:45 am]
BILLING CODE 3410–02–P
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 930
[Docket No. AMS–FV–06–0187; FV07–930–
1 FR]
Tart Cherries Grown in the States of
Michigan, et al.; Final Free and
Restricted Percentages for the 2006–
2007 Crop Year for Tart Cherries
Agricultural Marketing Service,
USDA.
ACTION: Final rule.
AGENCY:
SUMMARY: This rule establishes final free
and restricted percentages for the 2006–
2007 crop year. The percentages are 55
percent free and 45 percent restricted
and will establish the proportion of
cherries from the 2006 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.
DATES: Effective Date: March 26, 2007.
This final rule applies to all 2006–2007
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 E-mail at
Patricia.Petrella@usda.gov or
Kenneth.Johnson@usda.gov.
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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.
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
(Department) 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
2006–2007 crop year, beginning July 1,
2006, through June 30, 2007. 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.
SUPPLEMENTARY INFORMATION:
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Federal Register / Vol. 72, No. 56 / Friday, March 23, 2007 / Rules and Regulations
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;
and District eight—Washington.
Districts five, six and nine (Oregon,
Pennsylvania, and Wisconsin,
respectively) will not be regulated for
the 2006–2007 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, Pennsylvania,
and Wisconsin, handlers in those
districts will not be subject to volume
regulation during the 2006–2007 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
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 and reduce large
surpluses that may occur.
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 before
new crop supplies are available for
marketing.
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
13675
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 22, 2006, and
computed, for the 2006–2007 crop year,
an optimum supply of 182 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 calculated preliminary free
and restricted percentages as follows:
The USDA estimate of the crop for the
entire production area was 256 million
pounds; a 25 million pound carryin
(based on Board estimates) was
subtracted from the optimum supply of
182 million pounds which resulted in
2006–2007 tonnage requirements
(adjusted optimum supply) of 157
million pounds. The carryin figure
reflects the amount of cherries that
handlers actually had in inventory at
the beginning of the 2006–2007 crop
year. Subtracting the adjusted optimum
supply of 157 million pounds from the
USDA crop estimate (256 million
pounds) results in a surplus of 99
million pounds of tart cherries. The
surplus was divided by the production
in the regulated districts (249 million
pounds) and resulted in a restricted
percentage of 40 percent for the 2006–
2007 crop year. The free percentage was
60 percent (100 percent minus 40
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 2006–2007 year:
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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) Carryin held by handlers as of July 1, 2006 ..........................................................................................................................
(6) Adjusted optimum supply for current crop year (Item 3 minus Item 5) .................................................................................
(7) Surplus (Item 4 minus Item 6) ................................................................................................................................................
(8) USDA crop estimate for regulated districts ............................................................................................................................
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182
0
182
256
25
157
99
249
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Federal Register / Vol. 72, No. 56 / Friday, March 23, 2007 / Rules and Regulations
Free
(9) Final percentages (item 7 divided by item 8 x 100 equals restricted percentage; 100 minus restricted
percentage equals 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.
USDA establishes final free and
restricted percentages through the
informal rulemaking process. These
percentages would 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
USDA and 100 percent is the final
restricted percentage. The Board met on
September 9, 2006, to recommend final
free and restricted percentages.
The actual production reported by the
Board was 263 million pounds, which is
a 7 million pound increase from the
USDA crop estimate of 256 million
pounds.
A 31 million pound carryin (based on
handler reports) was subtracted from the
Board’s optimum supply of 182 million
pounds, yielding an adjusted optimum
supply for the current crop year of 151
million pounds. The adjusted optimum
supply of 151 million pounds was
subtracted from the actual production of
Restricted
60
40
263 million pounds, which resulted in
a 112 million pound surplus. The total
surplus of 112 million pounds is
divided by the 251 million-pound
volume of tart cherries produced in the
regulated districts. This results in a 45
percent restricted percentage and a
corresponding 55 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 2006–2007 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 ...............................................................................................................................
Final Percentages:
(4) Board reported production ......................................................................................................................................................
(5) Plus carryin held by handlers as of July 1, 2006 ...................................................................................................................
(6) Adjusted optimum supply (Item 3 minus Item 5) available for current crop year ..................................................................
(7) Surplus (Item 4 minus Item 6) ................................................................................................................................................
(8) Production in regulated districts .............................................................................................................................................
182
0
182
263
31
151
112
251
Percentages
Free
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(9) Preliminary percentages (item 7 divided by item 8 x 100 equals restricted percentage; 100 minus restricted percentage equals 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 § 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 18 million
pounds would be made available to
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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.
Final Regulatory Flexibility Analysis
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
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Restricted
55
45
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 include handlers,
have been defined by the Small
Business Administration (SBA) (13 CFR
121.201) as those having annual receipts
of less than $6,500,000, 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
2001/2002 through 2005/2006,
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approximately 93.8 percent of the U.S.
tart cherry crop, or 214.3 million
pounds, was processed annually. Of the
214.3 million pounds of tart cherries
processed, 62 percent was frozen, 26
percent was canned, and 12 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 37,050 acres in 2005/2006.
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 2006/2007 crop is moderate in
size at 263 million pounds. The largest
crop occurred in 1995 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
in 1987 to a high of 46.4 cents in 1991.
These problems of 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
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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, because 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
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13677
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 and carryin
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 (domestic) 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, and
Washington are the restricted areas for
this crop year and their combined total
production is 251 million pounds. A
free percentage of 55 percent means 138
million pounds are available to be
shipped to primary markets from these
four states. Production levels of 3.4
million pounds for Oregon, 4.5 million
pounds for Pennsylvania, and 4.3
million pounds for Wisconsin (the
unregulated areas in 2006–2007), result
in an additional 12.2 million pounds
available for primary market shipments.
In addition, USDA requires a 10
percent release from reserves as a
market growth factor. This results in an
additional 18 million pounds being
available for the primary market. The
138 million pounds from Michigan,
Utah, Washington, and New York; the
12.2 million pounds from the other
producing states; the 18 million pound
release; and the 31 million pound
carryin inventory gives a total of 199.2
million pounds being available for the
primary markets.
The econometric model is used to
estimate the difference between grower
prices with and without restrictions.
With volume controls, grower prices are
estimated to be approximately $0.025
per pound higher than without volume
controls.
The use of volume controls is
estimated to have a positive impact on
grower’s total revenues. With
restrictions, revenues are estimated to
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be $6.0 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 45 percent
volume control would not unduly
burden producers, particularly smaller
growers. The 45 percent restriction
would be applied to the growers in
Michigan, New York, Utah, and
Washington. The growers in the other
three States covered under the
marketing order will benefit from this
restriction.
Recent grower prices have been as
high as $0.44 per pound in 2002–03
when there was a crop failure. Prices in
the last two crop years have been $0.33
in 2004 and $0.24 per pound in 2005.
At current production levels, yield is
estimated at approximately 7,112
pounds per acre. At this level of yield,
the cost of production is estimated to be
$0.31 per pound (Cost of Production
Tart Cherries in Northwestern Michigan,
Nugent, Kole, Thornton, Bardenhagen).
Thus, this year’s grower price even with
regulation is estimated to be below the
cost of production. The use of volume
controls is believed to have little or no
effect on consumer prices and should
not result in fewer retail sales or sales
to food service outlets.
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 carry-in
inventories, a decrease in grower prices
of $0.0039 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 2006–
2007 crop year, the Board considered
the following factors contained in the
marketing policy: (1) The estimated total
production of tart cherries; (2) the
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
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18:36 Mar 22, 2007
Jkt 211001
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 2006 of the
free and restricted percentages
established by this rule (55 percent free
and 45 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 2006–2007 crop. Returns to
growers would not cover their costs of
production for this season which might
cause some to go out of business.
As mentioned earlier, 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.
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.
USDA has not identified any relevant
Federal rules that duplicate, overlap, or
conflict with this regulation.
In addition, the Board’s meeting was
widely publicized throughout the tart
cherry industry and all interested
persons were invited to attend the
meeting and participate in Board
deliberations on all issues. Like all
Board meetings, the September 9, 2006,
PO 00000
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Fmt 4700
Sfmt 4700
meeting was a public meeting and all
entities, both large and small, were able
to express views on this issue.
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 complying with
E-Government Act, to promote the use
of the Internet and other information
technologies to provide increased
opportunities for citizen access to
Government information and services
and for other purposes.
A proposed rule concerning this
action was published in the Federal
Register on January 16, 2007 (72 FR
1681). 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 on February 15, 2007, was
provided to allow interested persons to
respond to the proposal. No comments
were received.
A small business guide on complying
with fruit, vegetable, and specialty crop
marketing agreements and orders may
be viewed at: https://www.ams.usda.gov/
fv/moab.html. Any questions about the
compliance guide should be sent to Jay
Guerber at the previously mentioned
address in the FOR FURTHER INFORMATION
CONTACT section.
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)
E:\FR\FM\23MRR1.SGM
23MRR1
Federal Register / Vol. 72, No. 56 / Friday, March 23, 2007 / Rules and Regulations
because handlers are already shipping
tart cherries from the 2006–2007 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.
I 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
1. The authority citation for 7 CFR
part 930 continues to read as follows:
I
Authority: 7 U.S.C. 601–674.
2. Section 930.255 is added to read as
follows:
I
Note: This section will not appear in the
annual Code of Federal Regulations.
§ 930.255 Final free and restricted
percentages for the 2006–2007 crop year.
The final percentages for tart cherries
handled by handlers during the crop
year beginning on July 1, 2006, which
shall be free and restricted, respectively,
are designated as follows: Free
percentage, 55 percent and restricted
percentage, 45 percent.
Dated: March 19, 2007.
Lloyd C. Day,
Administrator, Agricultural Marketing
Service.
[FR Doc. E7–5313 Filed 3–22–07; 8:45 am]
BILLING CODE 3410–02–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2006–26721; Directorate
Identifier 2006–SW–28–AD; Amendment 39–
14961; AD 2006–26–51]
RIN 2120–AA64
Airworthiness Directives; Eurocopter
Deutschland GmbH Model MBB–BK
117 C–2 Helicopters
Federal Aviation
Administration, DOT.
ACTION: Final rule; request for
comments.
sroberts on PROD1PC70 with RULES
AGENCY:
SUMMARY: This document publishes in
the Federal Register an amendment
VerDate Aug<31>2005
18:36 Mar 22, 2007
Jkt 211001
adopting Airworthiness Directive (AD)
2006–26–51, which was sent previously
to all known U.S. owners and operators
of Eurocopter Deutschland GmbH (ECD)
Model MBB–BK 117 C–2 helicopters by
individual letters. This AD requires,
before further flight, marking the
position of the tail rotor control lever
dynamic weights (weights), removing
the split pins and the weights, and
visually inspecting and replacing, if
necessary, the tail rotor control lever
before further flight. This AD also
requires, within 10 hours time-inservice (TIS), and thereafter at intervals
not to exceed 25 hours TIS, repeating
the visual inspection of the tail rotor
control lever and replacing any
unairworthy tail rotor control lever with
an airworthy tail rotor control lever
before further flight. Also required is
reassembling the tail rotor control lever
by following the appropriate
maintenance instruction. This
amendment is prompted by an in-flight
incident in which the threaded portion
of the tail rotor control lever containing
a dynamic weight broke off leading to
severe vibrations. The actions specified
by this AD are intended to prevent
separation of the weights in flight,
severe vibration, and subsequent loss of
control of the helicopter.
DATES: Effective April 9, 2007, to all
persons except those persons to whom
it was made immediately effective by
Emergency AD 2006–26–51, issued on
December 22, 2006, which contained
the requirements of this amendment.
The incorporation by reference of
certain publications listed in the
regulations is approved by the Director
of the Federal Register as of April 9,
2007.
Comments for inclusion in the Rules
Docket must be received on or before
May 22, 2007.
ADDRESSES: Use one of the following
addresses to submit comments on this
AD:
• DOT Docket Web site: Go to
https://dms.dot.gov and follow the
instructions for sending your comments
electronically;
• Government-wide rulemaking Web
site: Go to https://www.regulations.gov
and follow the instructions for sending
your comments electronically;
• Mail: Docket Management Facility;
U.S. Department of Transportation, 400
Seventh Street, SW., Nassif Building,
Room PL–401, Washington, DC 20590;
• Fax: (202) 493–2251; or
• Hand Delivery: Room PL–401 on
the plaza level of the Nassif Building,
400 Seventh Street, SW., Washington,
DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
PO 00000
Frm 00009
Fmt 4700
Sfmt 4700
13679
You may get the service information
identified in this AD from American
Eurocopter Corporation, 2701 Forum
Drive, Grand Prairie, Texas 75053–4005,
telephone (972) 641–3460, fax (972)
641–3527.
Examining the Docket
You may examine the docket that
contains the AD, any comments, and
other information on the Internet at
https://dms.dot.gov, or in person at the
Docket Management System (DMS)
Docket Offices between 9 a.m. and 5
p.m., Monday through Friday, except
Federal holidays. The Docket Office
(telephone (800) 647–5227) is located on
the plaza level of the Department of
Transportation Nassif Building at the
street address stated in the ADDRESSES
section. Comments will be available in
the AD docket shortly after the DMS
receives them.
FOR FURTHER INFORMATION CONTACT:
Charles Harrison, Aviation Safety
Engineer, FAA, Rotorcraft Directorate,
Safety Management Group, Fort Worth,
Texas 76193–0110, telephone (817)
222–5128, fax (817) 222–5961.
On
December 22, 2006, the FAA issued
Emergency AD 2006–26–51 for the
specified model helicopters, which
requires, before further flight, marking
the position of the tail rotor control
lever dynamic weights (weights),
removing the split pins and the weights,
and by referring to Figure 1 of the
manufacturer’s service bulletin, visually
inspecting the area around the split pin
bore for score marks, notches, scratches,
or other damage that exceeds the
maintenance manual limitations or a
crack and replacing any unairworthy
tail rotor control lever before further
flight. The AD also requires, within 10
hours TIS, and thereafter at intervals not
to exceed 25 hours TIS, repeating the
visual inspection of the tail rotor control
lever and replacing any unairworthy tail
rotor control lever with an airworthy tail
rotor control lever before further flight.
Also required is reassembling the tail
rotor control lever by following the
appropriate maintenance instruction.
That action was prompted by an inflight incident in which a dynamic
weight broke off the tail rotor control
lever subsequently leading to
considerable vibrations. A visual
inspection revealed that the threaded
portion of the control lever containing
the dynamic weight had broken off. This
condition, if not corrected, could result
in separation of the weights in flight,
severe vibration, and subsequent loss of
control of the helicopter.
SUPPLEMENTARY INFORMATION:
E:\FR\FM\23MRR1.SGM
23MRR1
]]>Agencies
[Federal Register Volume 72, Number 56 (Friday, March 23, 2007)]
[Rules and Regulations]
[Pages 13674-13679]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-5313]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 930
[Docket No. AMS-FV-06-0187; FV07-930-1 FR]
Tart Cherries Grown in the States of Michigan, et al.; Final Free
and Restricted Percentages for the 2006-2007 Crop Year for Tart
Cherries
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule establishes final free and restricted percentages
for the 2006-2007 crop year. The percentages are 55 percent free and 45
percent restricted and will establish the proportion of cherries from
the 2006 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.
DATES: Effective Date: March 26, 2007. This final rule applies to all
2006-2007 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 E-mail at
Patricia.Petrella@usda.gov or Kenneth.Johnson@usda.gov.
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 (Department) 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 2006-2007 crop year, beginning July 1, 2006, through June 30, 2007.
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.
[[Page 13675]]
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; and District eight--Washington. Districts five, six and nine
(Oregon, Pennsylvania, and Wisconsin, respectively) will not be
regulated for the 2006-2007 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, Pennsylvania, and
Wisconsin, handlers in those districts will not be subject to volume
regulation during the 2006-2007 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
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 and reduce large surpluses
that may occur.
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 before new crop supplies are available for marketing.
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 22, 2006, and computed, for the 2006-2007
crop year, an optimum supply of 182 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 calculated preliminary free and restricted percentages as
follows: The USDA estimate of the crop for the entire production area
was 256 million pounds; a 25 million pound carryin (based on Board
estimates) was subtracted from the optimum supply of 182 million pounds
which resulted in 2006-2007 tonnage requirements (adjusted optimum
supply) of 157 million pounds. The carryin figure reflects the amount
of cherries that handlers actually had in inventory at the beginning of
the 2006-2007 crop year. Subtracting the adjusted optimum supply of 157
million pounds from the USDA crop estimate (256 million pounds) results
in a surplus of 99 million pounds of tart cherries. The surplus was
divided by the production in the regulated districts (249 million
pounds) and resulted in a restricted percentage of 40 percent for the
2006-2007 crop year. The free percentage was 60 percent (100 percent
minus 40 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 2006-2007 year:
------------------------------------------------------------------------
Millions of
pounds
------------------------------------------------------------------------
Optimum Supply Formula:
(1) Average sales of the prior three years.......... 182
(2) Plus desirable carryout......................... 0
(3) Optimum supply calculated by the Board at the 182
June meeting.......................................
Preliminary Percentages:
(4) USDA crop estimate.............................. 256
(5) Carryin held by handlers as of July 1, 2006..... 25
(6) Adjusted optimum supply for current crop year 157
(Item 3 minus Item 5)..............................
(7) Surplus (Item 4 minus Item 6)................... 99
(8) USDA crop estimate for regulated districts...... 249
------------------------------------------------------------------------
[[Page 13676]]
Free Restricted
------------------------------------------------------------------------
(9) Final percentages (item 7 60 40
divided by item 8 x 100 equals
restricted percentage; 100 minus
restricted percentage equals 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.
USDA establishes final free and restricted percentages through the
informal rulemaking process. These percentages would 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 USDA and 100 percent is the final restricted percentage.
The Board met on September 9, 2006, to recommend final free and
restricted percentages.
The actual production reported by the Board was 263 million pounds,
which is a 7 million pound increase from the USDA crop estimate of 256
million pounds.
A 31 million pound carryin (based on handler reports) was
subtracted from the Board's optimum supply of 182 million pounds,
yielding an adjusted optimum supply for the current crop year of 151
million pounds. The adjusted optimum supply of 151 million pounds was
subtracted from the actual production of 263 million pounds, which
resulted in a 112 million pound surplus. The total surplus of 112
million pounds is divided by the 251 million-pound volume of tart
cherries produced in the regulated districts. This results in a 45
percent restricted percentage and a corresponding 55 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 2006-2007 crop year:
------------------------------------------------------------------------
Millions of
pounds
------------------------------------------------------------------------
Optimum Supply Formula:
(1) Average sales of the prior three years.......... 182
(2) Plus desirable carryout......................... 0
(3) Optimum supply calculated by the Board.......... 182
Final Percentages:
(4) Board reported production....................... 263
(5) Plus carryin held by handlers as of July 1, 2006 31
(6) Adjusted optimum supply (Item 3 minus Item 5) 151
available for current crop year....................
(7) Surplus (Item 4 minus Item 6)................... 112
(8) Production in regulated districts............... 251
------------------------------------------------------------------------
Percentages
-------------------------------
Free Restricted
------------------------------------------------------------------------
(9) Preliminary percentages (item 7 55 45
divided by item 8 x 100 equals
restricted percentage; 100 minus
restricted percentage equals 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 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 18
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.
Final Regulatory Flexibility Analysis 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 include handlers, have been
defined by the Small Business Administration (SBA) (13 CFR 121.201) as
those having annual receipts of less than $6,500,000, 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 2001/2002 through 2005/2006,
[[Page 13677]]
approximately 93.8 percent of the U.S. tart cherry crop, or 214.3
million pounds, was processed annually. Of the 214.3 million pounds of
tart cherries processed, 62 percent was frozen, 26 percent was canned,
and 12 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 37,050 acres in 2005/2006. 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 2006/2007 crop is moderate in size at 263 million pounds. The
largest crop occurred in 1995 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 in 1987
to a high of 46.4 cents in 1991. These problems of 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, because 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 and carryin 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 (domestic) 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, and Washington are the restricted areas
for this crop year and their combined total production is 251 million
pounds. A free percentage of 55 percent means 138 million pounds are
available to be shipped to primary markets from these four states.
Production levels of 3.4 million pounds for Oregon, 4.5 million pounds
for Pennsylvania, and 4.3 million pounds for Wisconsin (the unregulated
areas in 2006-2007), result in an additional 12.2 million pounds
available for primary market shipments.
In addition, USDA requires a 10 percent release from reserves as a
market growth factor. This results in an additional 18 million pounds
being available for the primary market. The 138 million pounds from
Michigan, Utah, Washington, and New York; the 12.2 million pounds from
the other producing states; the 18 million pound release; and the 31
million pound carryin inventory gives a total of 199.2 million pounds
being available for the primary markets.
The econometric model is used to estimate the difference between
grower prices with and without restrictions. With volume controls,
grower prices are estimated to be approximately $0.025 per pound higher
than without volume controls.
The use of volume controls is estimated to have a positive impact
on grower's total revenues. With restrictions, revenues are estimated
to
[[Page 13678]]
be $6.0 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 45 percent volume control would not unduly
burden producers, particularly smaller growers. The 45 percent
restriction would be applied to the growers in Michigan, New York,
Utah, and Washington. The growers in the other three States covered
under the marketing order will benefit from this restriction.
Recent grower prices have been as high as $0.44 per pound in 2002-
03 when there was a crop failure. Prices in the last two crop years
have been $0.33 in 2004 and $0.24 per pound in 2005. At current
production levels, yield is estimated at approximately 7,112 pounds per
acre. At this level of yield, the cost of production is estimated to be
$0.31 per pound (Cost of Production Tart Cherries in Northwestern
Michigan, Nugent, Kole, Thornton, Bardenhagen). Thus, this year's
grower price even with regulation is estimated to be below the cost of
production. The use of volume controls is believed to have little or no
effect on consumer prices and should not result in fewer retail sales
or sales to food service outlets.
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 carry-in inventories,
a decrease in grower prices of $0.0039 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
2006-2007 crop year, the Board considered the following factors
contained in the marketing policy: (1) The estimated total production
of tart cherries; (2) the 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 2006 of the free and restricted percentages
established by this rule (55 percent free and 45 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
2006-2007 crop. Returns to growers would not cover their costs of
production for this season which might cause some to go out of
business.
As mentioned earlier, 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.
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.
USDA has not identified any relevant Federal rules that duplicate,
overlap, or conflict with this regulation.
In addition, the Board's meeting was widely publicized throughout
the tart cherry industry and all interested persons were invited to
attend the meeting and participate in Board deliberations on all
issues. Like all Board meetings, the September 9, 2006, meeting was a
public meeting and all entities, both large and small, were able to
express views on this issue.
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 complying with E-Government Act, to promote the
use of the Internet and other information technologies to provide
increased opportunities for citizen access to Government information
and services and for other purposes.
A proposed rule concerning this action was published in the Federal
Register on January 16, 2007 (72 FR 1681). 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 on
February 15, 2007, was provided to allow interested persons to respond
to the proposal. No comments were received.
A small business guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders may be viewed at: http:/
/www.ams.usda.gov/fv/moab.html. Any questions about the compliance
guide should be sent to Jay Guerber at the previously mentioned address
in the FOR FURTHER INFORMATION CONTACT section.
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)
[[Page 13679]]
because handlers are already shipping tart cherries from the 2006-2007
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 930.255 is added to read as follows:
Note: This section will not appear in the annual Code of Federal
Regulations.
Sec. 930.255 Final free and restricted percentages for the 2006-2007
crop year.
The final percentages for tart cherries handled by handlers during
the crop year beginning on July 1, 2006, which shall be free and
restricted, respectively, are designated as follows: Free percentage,
55 percent and restricted percentage, 45 percent.
Dated: March 19, 2007.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. E7-5313 Filed 3-22-07; 8:45 am]
BILLING CODE 3410-02-P
