Tart Cherries Grown in the States of Michigan, et al.; Final Free and Restricted Percentages for the 2007-2008 Crop Year for Tart Cherries, 11323-11328 [E8-4008]

Download as PDF rmajette on PROD1PC64 with RULES Federal Register / Vol. 73, No. 42 / Monday, March 3, 2008 / Rules and Regulations (iv) The samples are analyzed by a grader in accordance with the Directive for Inspection of Mustard Seed, provided by the Federal Grain Inspection Service or such other directive or standards that may be issued by FCIC. (4) Mustard production that is eligible for quality adjustment, as specified in sections 13(d)(2) and (3), will be reduced by multiplying the quality adjustment factors contained in the Special Provisions (if quality adjustment factors are not contained in the Special Provisions, the quality adjustment factor is determined by dividing the salvage price by the base contract price (not to exceed 1.000)) by the number of pounds remaining after any reduction due to excessive moisture (the moistureadjusted gross pounds) of the damaged or conditioned production. (i) The salvage price will be determined at the earlier of the date such quality adjusted production is sold or the date of final inspection for the unit subject to the following conditions: (A) Discounts used to establish the salvage price will be limited to those that are usual, customary, and reasonable. (B) The salvage price will not include any reductions for: (1) Moisture content; (2) Damage due to uninsured causes; (3) Drying, handling, processing, or any other costs associated with normal harvesting, handling, and marketing of the mustard; except, if the salvage price can be increased by conditioning, we may reduce the salvage price, after the production has been conditioned, by the cost of conditioning but not lower than the salvage price before conditioning; and (i) We may obtain salvage prices from any buyer of our choice. If we obtain salvage prices from one or more buyers located outside your local market area, we will reduce such price by the additional costs required to deliver the mustard to those buyers. (ii) Factors not associated with grading under the Directive for Inspection of Mustard Seed, provided by the Federal Grain Inspection Service or such other directive or standards that may be issued by FCIC including, but not limited to, protein and oil will not be considered. (e) Any production harvested from plants growing in the insured crop may be counted as production of the insured crop on an unadjusted weight basis. 14. Late Planting In lieu of section 16(a) of the Basic Provisions, the production guarantee (per acre) for each acre planted to the VerDate Aug<31>2005 14:18 Feb 29, 2008 Jkt 214001 insured crop during the late planting period will be reduced by 1 percent per day for each day planted after the final planting date, unless otherwise specified in the Special Provisions. 15. Prevented Planting In addition to the provisions contained in section 17 of the Basic Provisions, your prevented planting coverage will be 60 percent of your production guarantee (per acre) for timely planted acreage. When a portion of the insurable acreage within the unit is prevented from being planted, and there is more than one base contract price applicable to acreage in the unit, the lowest base contract price will be used in calculating any prevented planting payment. If you have limited or additional levels of coverage, as specified in 7 CFR part 400, subpart T, and pay an additional premium, you may increase your prevented planting coverage to the levels specified in the actuarial documents. Signed in Washington, DC, on February 20, 2008. Eldon Gould, Manager, Federal Crop Insurance Corporation. [FR Doc. E8–3963 Filed 2–29–08; 8:45 am] BILLING CODE 3410–08–P DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 930 [Docket No. AMS–FV–07–0119; FV07–930– 3 FR] Tart Cherries Grown in the States of Michigan, et al.; Final Free and Restricted Percentages for the 2007– 2008 Crop Year for Tart Cherries Agricultural Marketing Service, USDA. ACTION: Final rule. AGENCY: SUMMARY: This rule establishes final free and restricted percentages for 2007– 2008 crop year tart cherries covered under the Federal marketing order regulating tart cherries grown in seven states (order). The percentages are 57 percent free and 43 percent restricted and will establish the proportion of cherries from the 2007 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 order. The order regulates the handling PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 11323 of tart cherries grown in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin. DATES: Effective Date: March 4, 2008. This final rule applies to all 2007–2008 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, DC Marketing Field Office, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, Unit 155, 4700 River Road, Riverdale, MD 20737; telephone: (301) 734–5243, Fax: (301) 734–5275; e-mail Patricia.Petrella@usda.gov or Kenneth.Johnson@usda.gov. Small businesses may request information on complying with this regulation 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 final rule establishes final free and restricted percentages for tart cherries for the 2007–2008 crop year, beginning July 1, 2007, through June 30, 2008. This final 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 E:\FR\FM\03MRR1.SGM 03MRR1 11324 Federal Register / Vol. 73, No. 42 / Monday, March 3, 2008 / Rules and Regulations rmajette on PROD1PC64 with RULES 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 within the production area. 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 the 2007–2008 season are: District one—Northern Michigan; District two—Central Michigan; District four—New York; District seven—Utah; and District eight—Washington. Districts three, five, and six (Southwest Michigan, Oregon, and Pennsylvania, respectively) will not be regulated for the 2007–2008 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 Southwest Michigan, Oregon, and Pennsylvania, handlers in those districts would not be subject to volume regulation during the 2007– 2008 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, since 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 is 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 or by an average of such other crop estimates the Board votes to use. If the resulting number is positive, this represents the estimated overproduction, which would be the restricted tonnage. The restricted tonnage is then divided by the sum of the crop forecast(s) 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 21, 2007, and computed, for the 2007–2008 crop year, an optimum supply of 175 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. The Board calculated preliminary free and restricted percentages as follows: The USDA estimate of the crop for the entire production area was 294 million pounds; a 42 million pound carryin (based on Board estimates) was subtracted from the optimum supply of 175 million pounds which resulted in the 2007–2008 poundage requirements (adjusted optimum supply) of 133 million pounds. The carryin figure reflects the amount of cherries that handlers actually had in inventory at the beginning of the 2007–2008 crop year. Subtracting the adjusted optimum supply of 133 million pounds from the USDA crop estimate (294 million pounds) leaves a surplus of 161 million pounds of tart cherries. Subtracting an additional 12 million pounds for USDA purchases of tart cherry products from the 2006–07 crop but not delivered until 2007 results in a final surplus of 149 million pounds of tart cherries. The surplus (149 million pounds) was divided by the production in the regulated districts (289 million pounds) and resulted in a restricted percentage of 52 percent for the 2007–2008 crop year. The free percentage was 48 percent (100 percent minus 52 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 2007–2008 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 ............................................................................................. VerDate Aug<31>2005 14:18 Feb 29, 2008 Jkt 214001 PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 E:\FR\FM\03MRR1.SGM 03MRR1 175 0 175 Federal Register / Vol. 73, No. 42 / Monday, March 3, 2008 / Rules and Regulations 11325 Millions of pounds Preliminary Percentages: (4) USDA crop estimate ............................................................................................................................................................... (5) Carryin held by handlers as of July 1, 2007 .......................................................................................................................... (6) Adjusted optimum supply for current crop year (Item 3 minus Item 5) ................................................................................. (7) Surplus (Item 4 minus Item 6) ................................................................................................................................................ (8) Subtract pounds for USDA purchases ................................................................................................................................... (9) Surplus (Item 7 minus Item 8) ................................................................................................................................................ (10) USDA crop estimate for regulated districts .......................................................................................................................... Percentages Free (11) Preliminary percentages (Item 9 divided by Item 10 × 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. The Secretary establishes final free and restricted percentages through the informal rulemaking process. These percentages will 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 Secretary and 100 percent is the final restricted percentage. The Board met on September 6, 2007, to recommend final free and restricted percentages. The actual production reported by the Board was 248 million pounds, which is a 46 million pound decrease from the USDA crop estimate of 294 million pounds. A 39 million pound carryin (based on handler reports) was subtracted from the optimum supply of 174 million pounds, yielding an adjusted optimum supply for the 2007–2008 crop year of 135 million pounds. Subtracting the adjusted optimum supply of 135 million pounds from the USDA crop estimate (248 million pounds) and subtracting 12 294 42 133 161 12 149 289 Restricted 48 52 million pounds for USDA purchases of tart cherry products from the 2006–07 crop but not delivered until 2007 results in a surplus of 101 million pounds of tart cherries. The surplus was divided by the production in the regulated districts (236 million pounds) and resulted in a restricted percentage of 43 percent for the 2007–2008 crop year. The free percentage was 57 percent (100 percent minus 43 percent). The final percentages are based on the Board’s reported production figures and the following supply and demand information available in September for the 2007–2008 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, 2007 ................................................................................................................... (6) Subtract USDA committed sales ............................................................................................................................................ (7) Tonnage available for current crop year ................................................................................................................................ (8) Surplus (item 7 minus item 3) ................................................................................................................................................ (9) Production in regulated districts ............................................................................................................................................. Percentages Free rmajette on PROD1PC64 with RULES (10) Final Percentages (item 8 divided by item 9 × 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 the establishment of a final percentage 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 VerDate Aug<31>2005 14:18 Feb 29, 2008 Jkt 214001 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 will be made available to handlers this season in accordance with Department Guidelines. This release will be made available to every handler and released to such handler in proportion to the PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 174 0 174 248 39 12 275 101 236 Restricted 57 43 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 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. E:\FR\FM\03MRR1.SGM 03MRR1 rmajette on PROD1PC64 with RULES 11326 Federal Register / Vol. 73, No. 42 / Monday, March 3, 2008 / Rules and Regulations 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 $6,500,000, 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 2002/03 through 2006/07, approximately 97.9 percent of the U.S. tart cherry crop, or 202.9 million pounds, was processed annually. Of the 202.9 million pounds of tart cherries processed, 63.5 percent was frozen, 23.8 percent was canned, and 12.7 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 35,800 acres in 2006/07. This represents a 29 percent decrease in total bearing acres. Michigan leads the nation in tart cherry acreage with 70 percent of the total and produces about 75 percent of the U.S. tart cherry crop each year. The 2007/08 crop is moderate in size at 248 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 5.6 cents in 1995 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. VerDate Aug<31>2005 14:18 Feb 29, 2008 Jkt 214001 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, PO 00000 Frm 00022 Fmt 4700 Sfmt 4700 reflecting the large swings in annual supplies. In an effort to stabilize prices and supplies, 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 carry-in 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 two 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 236 million pounds. A 43 percent restriction means 186 million E:\FR\FM\03MRR1.SGM 03MRR1 rmajette on PROD1PC64 with RULES Federal Register / Vol. 73, No. 42 / Monday, March 3, 2008 / Rules and Regulations 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. The 135 million pounds from the two regulated districts in Michigan, Utah, Washington, New York, and Wisconsin, the 12.3 million pounds from the other producing states, the 17 million pound release, and the 39 million pound carryin inventory gives a total of 203 million pounds being available for the primary markets. The econometric model is used to estimate grower prices with and without regulation. With the volume controls, grower prices are estimated to be approximately $0.12 higher than without volume controls. The use of volume controls is estimated to have a positive impact on growers’ total revenues. With regulation, growers’ total revenues from processed cherries are estimated to be $10.1 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 43 percent volume control would not unduly burden producers, particularly smaller growers. The 43 percent restriction would be applied to the growers in the two districts in Michigan, New York, Utah, Washington, and Wisconsin. The growers in the other two states and the one district in Michigan covered under the marketing order will benefit from this restriction. The use of volume controls is believed to have little or no effect on consumer prices and will 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 carryin 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 VerDate Aug<31>2005 14:18 Feb 29, 2008 Jkt 214001 to be very useful and beneficial to growers and packers. In discussing the possibility of marketing percentages for the 2007– 2008 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 2007 of the free and restricted percentages established by this rule (57 percent free and 43 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 2007–2008 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, the Department’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 PO 00000 Frm 00023 Fmt 4700 Sfmt 4700 11327 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 6, 2007, meeting was a public meeting and all entities, both large and small, were able to express views on this issue. Finally, interested persons are invited to submit information on the regulatory and informational impacts of this action on small businesses. In 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, Tart Cherries Grown in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington and Wisconsin. 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 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: 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. A proposed rule concerning this action was published in the Federal Register on December 11, 2007 (72 FR E:\FR\FM\03MRR1.SGM 03MRR1 11328 Federal Register / Vol. 73, No. 42 / Monday, March 3, 2008 / Rules and Regulations 70240). Copies of the rule were mailed or sent via facsimile to all Board members and tart cherry handlers. Finally, the rule was made available through the Internet by USDA and the Office of the Federal Register. A 30-day comment period ending on January 10, 2008, 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 further 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 2007– 2008 crop and handlers need to be aware of this action as soon as possible. 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. 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 930.256 is added to read as follows: I Note: This section will not appear in the Annual Code of Federal Regulations. rmajette on PROD1PC64 with RULES § 930.256 Final free and restricted percentages for the 2007–2008 crop year. The final percentages for tart cherries handled by handlers during the crop year beginning on July 1, 2007, which shall be free and restricted, respectively, are designated as follows: Free percentage, 57 percent and restricted percentage, 43 percent. VerDate Aug<31>2005 14:18 Feb 29, 2008 Jkt 214001 Dated: February 27, 2008. Lloyd C. Day, Administrator, Agricultural Marketing Service. [FR Doc. E8–4008 Filed 2–29–08; 8:45 am] BILLING CODE 3410–02–P DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 984 [Docket No. AO–192–A7; AMS–FV–07–0004; FV06–984–1] Walnuts Grown in California; Order Amending Marketing Order and Agreement No. 984 Agricultural Marketing Service, USDA. ACTION: Final rule. AGENCY: SUMMARY: This rule amends the marketing order for walnuts grown in California. The amendments were proposed by the Walnut Marketing Board (Board), which is responsible for local administration of the order. The amendments will: Change the marketing year; include ‘‘pack’’ as a handler function; restructure the Board and revise nomination procedures; rename the Board and add authority to change Board composition; modify Board meeting and voting procedures; add authority for marketing promotion and paid advertising; add authority to accept voluntary financial contributions and to carry over excess assessment funds; broaden the scope of the quality control provisions and add the authority to recommend different regulations for different market destinations; add authority for the Board to appoint more than one inspection service; replace outdated order language with current industry terminology; and other related amendments. The Department of Agriculture (USDA) proposed three additional amendments: To establish tenure limitations for Board members, to require that continuance referenda be conducted on a periodic basis to ascertain producer support for the order, and to make any necessary conforming changes. With the exception of the amendment to establish tenure limitations, all of the amendments were favored by walnut growers in a mail referendum, held August 1 through 17, 2007. The proposed amendments are intended to improve the operation and functioning of the marketing order program. DATES: This rule is effective April 2, 2008, except for amendments to PO 00000 Frm 00024 Fmt 4700 Sfmt 4700 §§ 984.7, 984.13, 984.14, 984.15, 984.21, 984.22, 984.42, 984.46, 984.48, 984.50, 984.51, 984.52, 984.59, 984.67, 984.69, 984.70, 984.71, 984.73 and 984.89, which are effective September 1, 2008. FOR FURTHER INFORMATION CONTACT: Melissa Schmaedick, Marketing Order Administration Branch, Fruit and Vegetable Programs, Agricultural Marketing Service, USDA, Northwest Marketing Field Office, 1220 S.W. Third Avenue, Room 385, Portland, Oregon 97204; telephone: (503) 326–2724, Fax: (503) 326–7440, or e-mail: Melissa.Schmaedick@usda.gov. Small businesses may request information on this proceeding 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. SUPPLEMENTARY INFORMATION: Prior documents in this proceeding: Notice of Hearing issued on April 18, 2006, and published in the April 24, 2006, issue of the Federal Register (71 FR 20902); a Recommended Decision issued on March 19, 2007, and published in the March 27, 2007, issue of the Federal Register (72 FR 14368); and Secretary’s Decision and Referendum Order issued on July 9, 2007, and published in the July 13, 2007 issue of the Federal Register (72 FR 38498). This action is governed by the provisions of sections 556 and 557 of title 5 of the United States Code and is therefore excluded from the requirements of Executive Order 12866. Preliminary Statement This final rule was formulated on the record of a public hearing held on May 17 and 18, 2006, in Modesto, California. Notice of this hearing was issued April 18, 2006 and published in the Federal Register on April 24, 2006 (71 FR 420902). The hearing was held to consider the proposed amendment of Marketing Order 984, hereinafter referred to as the ‘‘order.’’ The hearing was held pursuant to the provisions of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601 et seq.), hereinafter referred to as the ‘‘Act,’’ and the applicable rules of practice and procedure governing the formulation of marketing agreements and marketing orders (7 CFR part 900). The notice of hearing contained order changes proposed by the Walnut Marketing Board (Board), which is responsible for local administration of the order, and by the Agricultural Marketing Service (AMS). Upon the basis of evidence introduced at the hearing and the record E:\FR\FM\03MRR1.SGM 03MRR1

Agencies

[Federal Register Volume 73, Number 42 (Monday, March 3, 2008)]
[Rules and Regulations]
[Pages 11323-11328]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-4008]


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

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Docket No. AMS-FV-07-0119; FV07-930-3 FR]


Tart Cherries Grown in the States of Michigan, et al.; Final Free 
and Restricted Percentages for the 2007-2008 Crop Year for Tart 
Cherries

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: This rule establishes final free and restricted percentages 
for 2007-2008 crop year tart cherries covered under the Federal 
marketing order regulating tart cherries grown in seven states (order). 
The percentages are 57 percent free and 43 percent restricted and will 
establish the proportion of cherries from the 2007 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 order. The 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 4, 2008. This final rule applies to all 
2007-2008 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, DC Marketing Field Office, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, Unit 155, 4700 River 
Road, Riverdale, MD 20737; telephone: (301) 734-5243, Fax: (301) 734-
5275; e-mail Patricia.Petrella@usda.gov or Kenneth.Johnson@usda.gov.
    Small businesses may request information on complying with this 
regulation 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 final rule 
establishes final free and restricted percentages for tart cherries for 
the 2007-2008 crop year, beginning July 1, 2007, through June 30, 2008. 
This final 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

[[Page 11324]]

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 within the production area. 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 
the 2007-2008 season are: District one--Northern Michigan; District 
two--Central Michigan; District four--New York; District seven--Utah; 
and District eight--Washington. Districts three, five, and six 
(Southwest Michigan, Oregon, and Pennsylvania, respectively) will not 
be regulated for the 2007-2008 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 Southwest Michigan, Oregon, 
and Pennsylvania, handlers in those districts would not be subject to 
volume regulation during the 2007-2008 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, since 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 is 
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 or by an average of such other crop estimates 
the Board votes to use. If the resulting number is positive, this 
represents the estimated over-production, which would be the restricted 
tonnage. The restricted tonnage is then divided by the sum of the crop 
forecast(s) 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 21, 2007, and computed, for the 2007-2008 
crop year, an optimum supply of 175 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.
    The Board calculated preliminary free and restricted percentages as 
follows: The USDA estimate of the crop for the entire production area 
was 294 million pounds; a 42 million pound carryin (based on Board 
estimates) was subtracted from the optimum supply of 175 million pounds 
which resulted in the 2007-2008 poundage requirements (adjusted optimum 
supply) of 133 million pounds. The carryin figure reflects the amount 
of cherries that handlers actually had in inventory at the beginning of 
the 2007-2008 crop year. Subtracting the adjusted optimum supply of 133 
million pounds from the USDA crop estimate (294 million pounds) leaves 
a surplus of 161 million pounds of tart cherries. Subtracting an 
additional 12 million pounds for USDA purchases of tart cherry products 
from the 2006-07 crop but not delivered until 2007 results in a final 
surplus of 149 million pounds of tart cherries. The surplus (149 
million pounds) was divided by the production in the regulated 
districts (289 million pounds) and resulted in a restricted percentage 
of 52 percent for the 2007-2008 crop year. The free percentage was 48 
percent (100 percent minus 52 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 2007-2008 year:

------------------------------------------------------------------------
                                                            Millions of
                                                              pounds
------------------------------------------------------------------------
Optimum Supply Formula:
    (1) Average sales of the prior three years..........             175
    (2) Plus desirable carryout.........................               0
    (3) Optimum supply calculated by the Board at the                175
     June meeting.......................................

[[Page 11325]]

 
Preliminary Percentages:
    (4) USDA crop estimate..............................             294
    (5) Carryin held by handlers as of July 1, 2007.....              42
    (6) Adjusted optimum supply for current crop year                133
     (Item 3 minus Item 5)..............................
    (7) Surplus (Item 4 minus Item 6)...................             161
    (8) Subtract pounds for USDA purchases..............              12
    (9) Surplus (Item 7 minus Item 8)...................             149
    (10) USDA crop estimate for regulated districts.....             289
------------------------------------------------------------------------


 
               Percentages                     Free         Restricted
------------------------------------------------------------------------
    (11) Preliminary percentages (Item 9              48              52
     divided by Item 10 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.
    The Secretary establishes final free and restricted percentages 
through the informal rulemaking process. These percentages will 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 Secretary and 100 percent is the final 
restricted percentage. The Board met on September 6, 2007, to recommend 
final free and restricted percentages.
    The actual production reported by the Board was 248 million pounds, 
which is a 46 million pound decrease from the USDA crop estimate of 294 
million pounds.
    A 39 million pound carryin (based on handler reports) was 
subtracted from the optimum supply of 174 million pounds, yielding an 
adjusted optimum supply for the 2007-2008 crop year of 135 million 
pounds. Subtracting the adjusted optimum supply of 135 million pounds 
from the USDA crop estimate (248 million pounds) and subtracting 12 
million pounds for USDA purchases of tart cherry products from the 
2006-07 crop but not delivered until 2007 results in a surplus of 101 
million pounds of tart cherries. The surplus was divided by the 
production in the regulated districts (236 million pounds) and resulted 
in a restricted percentage of 43 percent for the 2007-2008 crop year. 
The free percentage was 57 percent (100 percent minus 43 percent).
    The final percentages are based on the Board's reported production 
figures and the following supply and demand information available in 
September for the 2007-2008 crop year:

------------------------------------------------------------------------
                                                           Millions  of
                                                              pounds
------------------------------------------------------------------------
 Optimum Supply Formula:
    (1) Average sales of the prior three years..........             174
    (2) Plus desirable carryout.........................               0
    (3) Optimum supply calculated by the Board..........             174
 Final Percentages:
    (4) Board reported production.......................             248
    (5) Plus carryin held by handlers as of July 1, 2007              39
    (6) Subtract USDA committed sales...................              12
    (7) Tonnage available for current crop year.........             275
    (8) Surplus (item 7 minus item 3)...................             101
    (9) Production in regulated districts...............             236
------------------------------------------------------------------------


 
               Percentages                     Free         Restricted
------------------------------------------------------------------------
    (10) Final Percentages (item 8                    57              43
     divided by item 9 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 the establishment of a final percentage 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 17 million pounds will be made available 
to handlers this season in accordance with Department 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

    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.

[[Page 11326]]

    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 $6,500,000, 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 2002/03 through 2006/07, approximately 97.9 percent 
of the U.S. tart cherry crop, or 202.9 million pounds, was processed 
annually. Of the 202.9 million pounds of tart cherries processed, 63.5 
percent was frozen, 23.8 percent was canned, and 12.7 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 35,800 acres in 2006/07. This represents a 29 percent 
decrease in total bearing acres. Michigan leads the nation in tart 
cherry acreage with 70 percent of the total and produces about 75 
percent of the U.S. tart cherry crop each year.
    The 2007/08 crop is moderate in size at 248 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 5.6 cents in 1995 
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, 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 and supplies, 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 carry-in 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 two 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 236 million pounds. A 43 percent restriction means 186 million

[[Page 11327]]

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. The 135 million pounds from the 
two regulated districts in Michigan, Utah, Washington, New York, and 
Wisconsin, the 12.3 million pounds from the other producing states, the 
17 million pound release, and the 39 million pound carry-in inventory 
gives a total of 203 million pounds being available for the primary 
markets.
    The econometric model is used to estimate grower prices with and 
without regulation. With the volume controls, grower prices are 
estimated to be approximately $0.12 higher than without volume 
controls.
    The use of volume controls is estimated to have a positive impact 
on growers' total revenues. With regulation, growers' total revenues 
from processed cherries are estimated to be $10.1 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 43 percent volume control would not unduly 
burden producers, particularly smaller growers. The 43 percent 
restriction would be applied to the growers in the two districts in 
Michigan, New York, Utah, Washington, and Wisconsin. The growers in the 
other two states and the one district in Michigan covered under the 
marketing order will benefit from this restriction.
    The use of volume controls is believed to have little or no effect 
on consumer prices and will 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 carryin 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 
2007-2008 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 2007 of the free and restricted percentages 
established by this rule (57 percent free and 43 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 
2007-2008 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, the Department'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 6, 2007, meeting was a 
public meeting and all entities, both large and small, were able to 
express views on this issue. Finally, interested persons are invited to 
submit information on the regulatory and informational impacts of this 
action on small businesses.
    In 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, Tart 
Cherries Grown in the States of Michigan, New York, Pennsylvania, 
Oregon, Utah, Washington and Wisconsin.
    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 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: 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.
    A proposed rule concerning this action was published in the Federal 
Register on December 11, 2007 (72 FR

[[Page 11328]]

70240). Copies of the rule were mailed or sent via facsimile to all 
Board members and tart cherry handlers. Finally, the rule was made 
available through the Internet by USDA and the Office of the Federal 
Register. A 30-day comment period ending on January 10, 2008, 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 further 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 2007-2008 crop and handlers need to be aware of 
this action as soon as possible. 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 930.256 is added to read as follows:

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

Sec.  930.256  Final free and restricted percentages for the 2007-2008 
crop year.

    The final percentages for tart cherries handled by handlers during 
the crop year beginning on July 1, 2007, which shall be free and 
restricted, respectively, are designated as follows: Free percentage, 
57 percent and restricted percentage, 43 percent.

    Dated: February 27, 2008.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. E8-4008 Filed 2-29-08; 8:45 am]
BILLING CODE 3410-02-P