Raisins Produced From Grapes Grown In California; Use of Estimated Trade Demand to Compute Volume Regulation Percentages, 47490-47494 [2010-19369]

Download as PDF 47490 Proposed Rules Federal Register Vol. 75, No. 151 Friday, August 6, 2010 This section of the FEDERAL REGISTER contains notices to the public of the proposed issuance of rules and regulations. The purpose of these notices is to give interested persons an opportunity to participate in the rule making prior to the adoption of the final rules. DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 989 [Doc. No. AMS–FV–10–0044; FV10–989–2 PR] Raisins Produced From Grapes Grown In California; Use of Estimated Trade Demand to Compute Volume Regulation Percentages Agricultural Marketing Service, USDA. ACTION: Proposed rule. AGENCY: This proposed rule invites comments on using an estimated trade demand figure to compute volume regulation percentages for 2010–11 crop Natural (sun-dried) Seedless (NS) raisins covered under the Federal marketing order for California raisins (order). The order regulates the handling of raisins produced from grapes grown in California and is administered locally by the Raisin Administrative Committee (committee). This proposed rule would provide parameters for implementing volume regulation, if necessary, for 2010–11 crop NS raisins for the purposes of maintaining a portion of the industry’s export markets and stabilizing the domestic market. DATES: Comments must be received by August 23, 2010. ADDRESSES: Interested persons are invited to submit written comments concerning this proposal. Comments must be sent to the Docket Clerk, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 20250–0237; Fax: (202) 720–8938; or Internet: https://www.regulations.gov. All comments should reference the docket number and the date and page number of this issue of the Federal Register and will be made available for public inspection in the Office of the Docket Clerk during regular business hours, or can be viewed at: https:// mstockstill on DSKH9S0YB1PROD with PROPOSALS SUMMARY: VerDate Mar<15>2010 16:12 Aug 05, 2010 Jkt 220001 www.regulations.gov. All comments submitted in response to this rule will be included in the record and will be made available to the public. Please be advised that the identity of the individuals or entities submitting the comments will be made public on the Internet at the address provided above. FOR FURTHER INFORMATION CONTACT: Terry Vawter, Senior Marketing Specialist, or Kurt J. Kimmel, Regional Manager, California Marketing Field Office, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA; Telephone: (559) 487– 5901, Fax: (559) 487–5906, or E-mail: Terry.Vawter@ams.usda.gov or Kurt.Kimmel@ams.usda.gov. Small businesses may request information on complying with this proposed regulation by contacting Antoinette Carter, 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: Antoinette.Carter@ams.usda.gov. SUPPLEMENTARY INFORMATION: This proposal is issued under Marketing Agreement and Order No. 989, both as amended, (7 CFR part 989), regulating the handling of raisins produced from grapes grown in California, hereinafter referred to as the ‘‘order.’’ The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601–674), hereinafter referred to as the ‘‘Act.’’ The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Order 12866. This proposal has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have retroactive effect. 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 USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA’s ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling. This proposal invites comments on using an estimated trade demand figure, rather than a computed trade demand figure, to calculate volume regulation percentages, if necessary, for 2010–11 crop NS raisins covered under the order. This proposed rule would provide parameters for implementing volume regulation, if necessary, for 2010–11 crop NS raisins for the purposes of maintaining a portion of the industry’s export markets and stabilizing the domestic market. This action was unanimously recommended by the committee at a meeting on May 13, 2010. Volume Regulation Authority The order provides authority for volume regulation, which is designed to promote orderly marketing conditions, stabilize prices and supplies, and improve producer returns. When volume regulation is in effect, a percentage of the California raisin crop may be sold by handlers to any market (free tonnage), while the remaining percentage must be held by handlers in a reserve pool (reserve) for the account of the committee. Reserve raisins are disposed of through various programs authorized under the order, consistent with § 989.67(b), which specifies that reserve raisins shall be disposed of by the committee: (1) By sale to handlers for sale in specified outlets or for resale to exporters for sale in export outlets; (2) By direct sale to any agency of the U.S. government for noncompetitive use; (3) By direct sale to foreign government agencies or foreign importers in approved countries; (4) by gift; and (5) By any other means consistent with the provisions of this section, and in outlets noncompetitive with those for free tonnage raisins. The reserve pool’s equity holders (primarily producers) are the beneficiaries of reserve raisin sales. Section 989.54 of the order prescribes procedures and time frames to be followed in establishing volume regulation for each crop year, which runs from August 1 through July 31. The committee must meet on or before E:\FR\FM\06AUP1.SGM 06AUP1 47491 Federal Register / Vol. 75, No. 151 / Friday, August 6, 2010 / Proposed Rules August 15 to review data regarding raisin supplies. At that time, the committee computes a trade demand for each varietal type of raisins for which a free tonnage percentage might be recommended. This is referred to as the ‘‘computed trade demand,’’ and is defined in the order as 90 percent of the prior year’s domestic and export shipments, minus the carry-in inventory from the prior year, plus the desirable carry-out inventory for the end of the current year. Paragraph (e) of § 989.54 contains a list of factors that the committee must consider when computing volume regulation percentages. Subparagraph 4 of § 989.54(e) specifies that the committee shall consider the estimated trade demand for raisins in free tonnage outlets, if the estimated trade demand is different than the computed trade demand. Further, section 989.154(b) of the order’s rules and regulations currently provides parameters for use of an estimated trade demand for the 2007–08 crop year. Establishing Volume Regulation On or before October 5, the committee must announce preliminary crop estimates and determine whether volume regulation is warranted for the various varietal types for which it computed trade demand. Preliminary volume regulation percentages are then computed to release 85 percent of the computed trade demand, if a field price for raisins has been established; or 65 percent of the trade demand, if no field price for raisins has been established. The field price, also known as the ‘‘free tonnage price’’ for raisins is the price that handlers pay producers for the free tonnage portion of their crop. On or before February 15 of the following year, the committee must recommend final free and reserve percentages that will tend to release the full trade demand. 10 Plus 10 Offers When volume regulation is in effect, the order also requires that two offers of reserve raisins be made to handlers for free use. These offers are known as the ‘‘10 plus 10’’ offers. Each offer consists of a quantity of reserve raisins equal to 10 percent of the prior year’s shipments. The order also specifies that 10 plus 10 raisins must be sold to handlers at the current field price plus a 3 percent surcharge and committee costs, which has historically added $100 to the field price cost of reserve raisins on a 10 plus 10 sale. Development of Export Markets Volume regulation has been utilized for NS raisins in all but 11 crop years since the order’s inception in 1949. The procedures for determining volume regulation percentages have been modified over the years to address the changing needs of the industry. Volume regulation has historically been an effective tool for managing an oversupply of raisins. Further, the use of reserve pool raisins and their related industry promotional activities has assisted the industry in the development of the demand for California raisins in export markets. TABLE 1—NATURAL SEEDLESS DELIVERIES, FIELD PRICES, AND DOMESTIC AND EXPORT SHIPMENTS IN NATURAL CONDITION TONS Crop year Deliveries 2009–10* .......................................................... 2008–09 ........................................................... 2007–08 ........................................................... 2006–07 ........................................................... 2005–06 ........................................................... 2004–05 ........................................................... 2003–04 ........................................................... 2002–03 ........................................................... 2001–02 ........................................................... 2000–01 ........................................................... 1999–00 ........................................................... 1998–99 ........................................................... 1997–98 ........................................................... 1996–97 ........................................................... 1995–96 ........................................................... 1994–95 ........................................................... 1993–94 ........................................................... Domestic shipments Field prices 297,467 364,268 329,288 282,999 319,126 265,262 296,864 388,010 377,328 432,616 299,910 240,469 382,448 272,063 325,911 378,427 387,007 $1,323 1,310 1,210 1,210 1,210 1,210 810 745 880 877 1,425 1,290 1,250 1,220 1,160 1,160 1,155 Export shipments 157,278 200,775 201,355 203,889 195,822 205,002 191,376 189,160 186,361 185,429 166,127 181,666 185,745 198,167 198,517 199,760 214,852 Percent export 127,793 131,587 148,243 109,727 102,632 112,996 112,860 108,480 112,272 109,598 97,342 115,234 124,349 117,719 116,653 119,968 122,085 45 40 42 35 34 36 37 36 38 37 37 39 40 37 37 38 36 mstockstill on DSKH9S0YB1PROD with PROPOSALS * 2009–10 data is for a partial crop year, from August 1, 2009, through May 2010. The raisin industry uses various terms to describe the weight of raisins in a container. The term, ‘‘natural condition tons,’’ as used in Table 1, is synonymous with ‘‘sweatbox tons,’’ while ‘‘packed tons’’ consists of natural condition tons converted to a packed weight. ‘‘Packed tons’’ can be 5 to 10 percent lighter (5.188 percent has been established by the committee as appropriate for the 2009–10 crop year), due to the inherent loss of moisture, the removal of stems, branches, etc., as raisins move from the field to the packed box. This reduction in weight is referred to as ‘‘shrink.’’ For VerDate Mar<15>2010 16:12 Aug 05, 2010 Jkt 220001 convenience and consistency, tonnage is provided as ‘‘natural condition tons,’’ unless specified as ‘‘packed tons.’’ In addition, data from the 1985–86 crop year through the 1992–93 crop year indicates that exports of California NS raisins averaged about 34 percent of the industry’s total NS raisin shipments per year, excluding government purchases. Thus, according to the historical data and information from the sixteen years in the above table, the percentage of export shipments compared to total shipments has continued to increase overall, demonstrating the importance PO 00000 Frm 00002 Fmt 4702 Sfmt 4702 of the export market to the California raisin industry. Export Replacement Offer One market development program operated through reserve pools, the Export Replacement Offer (ERO), helps U.S. raisins to be price competitive in export markets. Prices in export markets are generally lower than in the domestic market. The ERO began in the early 1980’s as a ‘‘raisin-back’’ program whereby handlers who exported California raisins could purchase, at a reduced price, reserve raisins for free E:\FR\FM\06AUP1.SGM 06AUP1 47492 Federal Register / Vol. 75, No. 151 / Friday, August 6, 2010 / Proposed Rules mstockstill on DSKH9S0YB1PROD with PROPOSALS use. This effectively blended down the cost of the raisins that were exported, seeking to equate the cost of acquired free tonnage raisins with the reduced value of raisins in the export market. During the 1994–95 crop year, the NS raisin ERO was half raisin-back and half cash-back and changed in 1996 to a ‘‘cash-back’’ program, whereby exporting handlers could qualify for cash reimbursements from the reserve pool for their export shipments. The ERO has been a cash-back program in all years since then, except for 2000, 2001, and a portion of 2002, 2008, and 2009. During 2000 and 2001 a raisin-back program was used and during 2002, 2008, and 2009 both ‘‘cashback’’ and ‘‘raisin-back’’ programs were implemented. Assets for financing the cash-back program largely accrue from the 10 plus 10 sales of reserve raisins. Since 2005, an average of $60.6 million of reserve pool assets (cash and raisins) have been used to support exports of about 115,000 packed tons of NS raisins annually in both cash-back and raisinback programs. Current Industry Situation Export shipments of California raisins have been extraordinarily high during the 2009–10 crop year due to light worldwide production of raisins, a weak U.S. dollar, and successful industry marketing efforts. These significantlyhigher shipments will result in an unusually high computed trade demand for the 2010–11 crop year. The committee is also concerned that the 2010–11 crop may be reduced because of a continuing trend of grapevine removals since 2004, at a rate of approximately 7,000 acres per year; unseasonable rain and cool temperatures this spring; and the potential for higher prices in the wine and juice markets, which compete for grapes with the raisin industry. In addition, the European Grape Vine Moth has recently been found in the Central Valley of California, a major and highly-concentrated growing area. This pest has the potential for significant grape losses, should it become established. Even without significant damage in the short-run, a 96-squaremile quarantine area has already been established, which currently restricts the movement of the grape crop out of those areas. The industry does not yet know the effects this or subsequent quarantines may have on raisins. Thus, with the potential for a higher computed trade demand and a smaller crop, volume regulation may not be warranted for 2010–11 NS raisins, based on the order’s computed trade demand formula, mandated in § 989.54(a). VerDate Mar<15>2010 16:12 Aug 05, 2010 Jkt 220001 The effective marketing of California raisins requires strategies and approaches which address both the domestic and the export markets. If a 2010–11 reserve pool is not established, the industry would not be able to continue the ERO program and support its export sales. The committee is concerned that the industry could lose one-third or more of its export market without an ERO program. Further, handlers who could not sell their raisins into the export market would likely sell their raisins into the domestic market. Annual domestic shipments of NS raisins for the past sixteen years have averaged about 194,000 tons. The committee is concerned that raisins necessarily diverted from the export market into the domestic market could create instability in the short term. Implementing Volume Regulation To Maintain the ERO Under Adverse Trade Demand or Supply Situations Based on the above-described considerations, the committee unanimously recommended using an estimated trade demand for the 2010–11 crop NS raisins to compute volume regulation percentages, creating a reserve if the crop estimate is equal to, less than, or no more than 10 percent greater than the computed trade demand; provided that the final reserve percentage computed using such estimated trade demand shall be no more than 10 percent, and no reserve shall be established if the final 2010–11 NS raisin crop estimate is less than 110 percent of the previous crop year’s domestic shipments. At that level, the needs of the domestic market would be met, as would a portion of the export market, when combined with the available carry-in of raisins from the 2009–10 crop. To illustrate how this would work, the committee would compute a trade demand for NS raisins on or before August 15. At that time, the committee would also announce its intention to use an estimated trade demand to compute volume regulation percentages, if the 2010–11 NS raisin crop estimate is at least 110 percent of the previous year’s domestic shipments, but no more than 10 percent greater than the computed trade demand. An estimated trade demand would allow for the establishment of no more than a 10 percent reserve which would be used to fund the Export Replacement Offer (ERO) program. PO 00000 Frm 00003 Fmt 4702 Sfmt 4702 Crop Estimate Is Less Than 110 Percent of the Previous Year’s Domestic Shipments—No Regulation Under the committee’s proposal, if the 2010–11 crop estimate is less than 110 percent of the previous year’s domestic shipments, no volume regulation would be recommended. With a crop estimate of 215,000 tons, for example, and an average of about 80,000 tons of NS raisins estimated to be carried forward from the 2009–10 crop year, a supply of approximately 295,000 tons of raisins could be available for the 2010–11 crop year. This is lower than the average annual NS raisin shipments from Table 1 of approximately 310,000 tons, excluding government purchases. With such an available supply, the committee believes that the industry’s first priority would be to satisfy the needs of the domestic market, which absorbs an annual average of about 195,000 tons. Assuming that 195,000 tons were shipped domestically, there would be 100,000 tons available to ship into the export market. Crop Estimate Equal to 110 Percent of the Previous Year’s Domestic Shipments and No More Than 10 Percent Above the Computed Trade Demand—Volume Regulation If the October 2010–11 crop estimate for NS raisins is 110 percent or more of the previous year’s domestic shipments and no more than 10 percent above the computed trade demand, the committee would use an estimated trade demand figure to compute preliminary free and reserve percentages for the 2010–11 crop. The committee would compute final free and reserve percentages no later than February 15. Under this proposal, if an estimated trade demand figure is used to compute those percentages, the final reserve percentage would not exceed 10 percent of the estimated crop. Producers would ultimately be paid the prevailing free-tonnage price for raisins on 90 percent of their crop—the free tonnage portion. The reserve would be offered for sale to handlers in the 10 plus 10 offers. However, since the order specifies that each offer consists of a quantity of reserve raisins equal to 10 percent of the prior year’s shipments, under this situation, the available limited volume would not meet this requirement. In that instance, all of the raisins held in reserve would be made available to handlers for free use through the 10 plus 10 offers, nonetheless. Under any other situations than those described herein, the committee would rely on the computed trade demand to E:\FR\FM\06AUP1.SGM 06AUP1 Federal Register / Vol. 75, No. 151 / Friday, August 6, 2010 / Proposed Rules calculate volume regulation percentages. mstockstill on DSKH9S0YB1PROD with PROPOSALS Summary of the Proposed Regulation It is anticipated that allowing the committee to use an estimated trade demand to compute volume regulation percentages for 2010–11 crop year NS raisins under adverse trade demand or supply situations would enable the industry to supply the domestic market and maintain a limited export program. The committee proposed the following criteria for establishing volume regulation for the 2010–11 crop year: (1) If the crop estimate is below 110 percent of the previous year’s domestic shipments, no volume regulation would be implemented. If this occurs, it is probable that the needs of the domestic market would be met first, but demand in the export markets would likely not be satisfied; (2) If the crop is equal to 110 percent of the previous year’s domestic shipments and no more than 10 percent above the computed trade demand, a small reserve pool could be established to allow the industry to not only satisfy the needs of the domestic market, but also maintain a portion of its export sales. By maintaining an ERO program, even at a reduced level, exporting raisin handlers could continue to be price competitive, sell their raisins abroad, and endeavor to maintain the export market on a long-term basis. The domestic marketing would remain stable because raisin supplies would be consistent, but not flooded with raisins that would normally be exported; and (3) Under any other circumstances, the committee would utilize the computed trade demand. Initial 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 initial regulatory flexibility analysis. The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, order, and rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf. There are approximately 26 handlers of California raisins who are subject to regulation under the order and approximately 3,000 raisin producers in the regulated area. The Small Business VerDate Mar<15>2010 16:12 Aug 05, 2010 Jkt 220001 Administration (13 CFR 121.201) defines small agricultural service firms as those having annual receipts of less than $7,000,000, and small agricultural producers as those having annual receipts of less than $750,000. Based upon shipment data and a recent survey conducted by the committee, approximately 18 handlers and a majority of producers of California raisins may be classified as small entities. This rule would revise § 989.154(b) of the order’s administrative rules and regulations by establishing the parameters for using an estimated trade demand figure specified in § 989.54(e)(4) of the order to compute volume regulation percentages for the 2010–11 crop NS raisins. Section 989.154(b) would provide guidelines for the use of estimated trade demand in lieu of computed trade demand in certain situations for the purposes of maintaining a portion of the industry’s export markets and stabilizing the domestic market. Regarding the impact of the action on producers and handlers, under the committee’s proposal, if an estimated trade demand figure were used to compute volume regulation percentages, the final reserve percentage would compute to no more than 10 percent. Producers would thus be paid the free tonnage price for raisins for at least 90 percent of their crop. No more than 10 percent of their crop would go into a reserve pool. The free tonnage price for NS raisins for the past 17 years depicted on Table 1 has averaged $1,144 per ton. Handlers, in turn, would purchase 90 percent of their raisins directly from producers at the free tonnage price for raisins, but would have to buy remaining raisins out of the committee’s reserve pool at a higher price (field price plus 3 percent and committee costs). The 10 plus 10 price of NS reserve raisins has averaged about $100 higher than the free tonnage price for raisins for the past 5 years, or $1,353 per ton. Proceeds from the 10 plus 10 sales are used to support export sales. While there may be some initial costs for both producers and handlers under the above scenario, the long-term benefits of this action are expected to outweigh the costs. The committee believes that with no reserve pool, and hence, no ERO program, export sales would decline. With no export program, handlers would necessarily divert raisins normally destined for export markets into the domestic market, which typically absorbs about 194,000 tons annually. Additional NS raisins sold into the domestic market could PO 00000 Frm 00004 Fmt 4702 Sfmt 4702 47493 destabilize the industry’s primary market in the short run. Committee members have commented that once the industry’s export markets are lost, it is difficult and costly to recover those sales in the short run. As noted previously, export shipments have increased over the past sixteen years to over 45 percent of all shipments. Raisins are generally used as an ingredient in baked goods, cereals, and snacks. Typically, buyers prefer reliable and consistent supplies from year to year and from product to product. Once buyers lose their regular supplies and switch to different ingredients and/or sources, they may not switch back readily. Thus, the loss of a portion of the export markets could compound into greater losses long term. Export markets for raisins are highly competitive. The U.S. and Turkey are the world’s leading producers of raisins. Turkey exports approximately 76 percent of its total production, and represents an alternative source for raisin buyers. During the 2009–10 crop year, Turkish raisin production was 280,000 tons, down from 310,000 for the 2008–09 crop year. Exports of California NS raisins during the 2009–10 crop year were extraordinarily high due to marketing efforts by the handlers and the RAC, low worldwide production in other dried grape growing regions, the value of the dollar, and the high quality of California raisins. Maintaining the industry’s export markets would help the industry maximize its 2010–11 total shipments of NS raisins, and reduce the possibility of carrying forward large quantities of inventory into the 2011–12 crop year. If the industry is unable to maximize its 2010–11 shipments of NS raisins, carryin inventory could be high. Reduced shipments and high carry-in would result in a lower computed trade demand figure for the 2011–12 crop year; and, ultimately, a lower free tonnage percentage. Since NS raisin producers benefit more from those raisins which are free tonnage, a lower free tonnage percentage would result in reduced returns to producers. If 2010– 11 returns to producers are reduced, this, coupled with the risks of rain, labor shortages during harvest, and the unknown effects of the European Grape Vine Moth, may influence producers to sell their raisin-variety fresh grapes to alternate market outlets: fresh, wine, or juice concentrate markets. Additional supplies to those alternate market outlets have the potential to reduce returns, as well. E:\FR\FM\06AUP1.SGM 06AUP1 47494 Federal Register / Vol. 75, No. 151 / Friday, August 6, 2010 / Proposed Rules mstockstill on DSKH9S0YB1PROD with PROPOSALS Alternatives to This Proposed Rule The committee discussed alternatives to this change. One option considered was using one of the three prior year’s domestic shipments to compute trade demand, pursuant to § 989.54(a) of the order. However, the order permits this only if the prior year’s domestic shipments were limited due to crop conditions. Since 2009–10 shipments have increased, the committee concluded this option was not viable. Another alternative considered was utilizing the computed trade demand formula in the order and using all available funds to support the ERO. However, the committee estimates that the funds remaining from the 2009–10 reserve pool would only support the ERO through August 2010, which would leave the industry without assets to support an ERO for eleven months of the season. A third alternative considered was to maintain the existing language from § 989.154(b) and making it applicable to the 2010–11 crop year. (Section 989.154(b) currently authorizes the committee to use an estimated trade demand for the 2008–09 season only.) However, merely making a recommendation to change the applicable crop year did not address the potential needs of the industry. The existing language limited the committee by mandating that no reserve would be established if the 2010–11 crop estimate were less than 215,000 natural condition tons. After a series of discussions from two subcommittees, the committee determined that a more appropriate lower threshold for utilizing estimated trade demand would be 110 percent of the prior year’s domestic shipments rather than a fixed quantity of 215,000 tons. This proposed rule provides parameters for implementing volume regulation, if necessary, for 2010–11 crop NS raisins for the purposes of stabilizing the domestic market and maintaining a portion of the industry’s export markets. Accordingly, this action would not impose any additional reporting or recordkeeping requirements on either small or large raisin handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. 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 VerDate Mar<15>2010 16:12 Aug 05, 2010 Jkt 220001 access to Government information and services, and for other purposes. USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this proposed rule. In addition, the committee’s Rulemaking Work Group and the Administrative Issues Subcommittee each deliberated this issue at their meetings on May 11 and May 13, 2010, respectively, prior to the committee’s meeting on May 13, 2010. All three meetings were widely publicized throughout the raisin industry, and all interested persons were invited to attend the meetings and encouraged to participate in subcommittee and committee deliberations on all issues. Like all subcommittee and committee meetings, the May 11 and 13, 2010, meetings were public meetings; and all entities, both large and small, were able to express their views on this issue. Finally, interested persons are invited to submit comments on this proposed rule, including the regulatory and informational impacts of this action on small businesses. 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/ MarketingOrdersSmallBuinessGuide. Any questions about the compliance guide should be sent to Antoinette Carter at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section. A 15-day comment period is provided to allow interested persons to respond to this proposal. Fifteen days is deemed appropriate because this action, if adopted, should be in place by the beginning of the 2010–11 crop year, August 1. All written comments timely received will be considered before a final determination is made on this matter. § 989.154 List of Subjects in 7 CFR Part 989 SUMMARY: Grapes, Marketing agreements, Raisins, Reporting and recordkeeping requirements. For the reasons set forth in the preamble, 7 CFR part 989 is proposed to be amended as follows: PART 989—RAISINS PRODUCED FROM GRAPES GROWN IN CALIFORNIA 1. The authority citation for 7 CFR part 989 continues to read as follows: Authority: 7 U.S.C. 601–674. 2. In § 989.154, paragraph (b) is revised to read as follows: PO 00000 Frm 00005 Fmt 4702 Sfmt 4702 Marketing policy computations. * * * * * (b) Estimated trade demand. Pursuant to § 989.54(e)(4), estimated trade demand is a figure different than the trade demand computed according to the formula in § 989.54(a). The Committee shall use an estimated trade demand to compute preliminary and interim free and reserve percentages, or determine such final percentages for recommendation to the Secretary for the 2010–11 crop year of Natural (sundried) Seedless (NS) raisins if the crop estimate is equal to, less than, or no more than 10 percent greater than the computed trade demand: Provided, That the final reserve percentage computed using such estimated trade demand shall be no more than 10 percent, and no reserve shall be established if the final 2010–11 NS raisin crop estimate is less than 110 percent of the previous crop year’s domestic shipments. Dated: August 2, 2010. David R. Shipman, Acting Administrator, Agricultural Marketing Service. [FR Doc. 2010–19369 Filed 8–5–10; 8:45 am] BILLING CODE P NUCLEAR REGULATORY COMMISSION 10 CFR Part 37 [NRC–2010–0194] RIN 3150–AI12 Implementation Guidance for Physical Protection of Byproduct Material; Category 1 and Category 2 Quantities of Radioactive Material; Meeting Nuclear Regulatory Commission. ACTION: Notice of meeting. AGENCY: The U.S. Nuclear Regulatory Commission (NRC) is proposing to amend its regulations to establish security requirements for the use and transport of category 1 and category 2 quantities of radioactive material. The NRC has prepared draft guidance to address implementation of the proposed regulations. The notice of availability for the guidance was published July 14, 2010. The public comment period on the guidance ends November 12, 2010. As part of the public comment process on the guidance, the NRC plans to hold two transcribed public meetings to solicit comments on the draft implementation guidance. The meetings are open to the public and all interested parties may attend. The first meeting E:\FR\FM\06AUP1.SGM 06AUP1

Agencies

[Federal Register Volume 75, Number 151 (Friday, August 6, 2010)]
[Proposed Rules]
[Pages 47490-47494]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-19369]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 75, No. 151 / Friday, August 6, 2010 / 
Proposed Rules

[[Page 47490]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 989

[Doc. No. AMS-FV-10-0044; FV10-989-2 PR]


Raisins Produced From Grapes Grown In California; Use of 
Estimated Trade Demand to Compute Volume Regulation Percentages

AGENCY:  Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: This proposed rule invites comments on using an estimated 
trade demand figure to compute volume regulation percentages for 2010-
11 crop Natural (sun-dried) Seedless (NS) raisins covered under the 
Federal marketing order for California raisins (order). The order 
regulates the handling of raisins produced from grapes grown in 
California and is administered locally by the Raisin Administrative 
Committee (committee). This proposed rule would provide parameters for 
implementing volume regulation, if necessary, for 2010-11 crop NS 
raisins for the purposes of maintaining a portion of the industry's 
export markets and stabilizing the domestic market.

DATES: Comments must be received by August 23, 2010.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments must be sent to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938; or Internet: https://www.regulations.gov. All comments should reference the docket number 
and the date and page number of this issue of the Federal Register and 
will be made available for public inspection in the Office of the 
Docket Clerk during regular business hours, or can be viewed at: https://www.regulations.gov. All comments submitted in response to this rule 
will be included in the record and will be made available to the 
public. Please be advised that the identity of the individuals or 
entities submitting the comments will be made public on the Internet at 
the address provided above.

FOR FURTHER INFORMATION CONTACT: Terry Vawter, Senior Marketing 
Specialist, or Kurt J. Kimmel, Regional Manager, California Marketing 
Field Office, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, AMS, USDA; Telephone: (559) 487-5901, Fax: (559) 
487-5906, or E-mail: Terry.Vawter@ams.usda.gov or 
Kurt.Kimmel@ams.usda.gov.
    Small businesses may request information on complying with this 
proposed regulation by contacting Antoinette Carter, 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: 
Antoinette.Carter@ams.usda.gov.

SUPPLEMENTARY INFORMATION: This proposal is issued under Marketing 
Agreement and Order No. 989, both as amended, (7 CFR part 989), 
regulating the handling of raisins produced from grapes grown in 
California, hereinafter referred to as the ``order.'' The order is 
effective under the Agricultural Marketing Agreement Act of 1937, as 
amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act.''
    The Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Order 12866.
    This proposal has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect.
    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 USDA a petition 
stating that the order, any provision of the order, or any obligation 
imposed in connection with the order is not in accordance with law and 
request a modification of the order or to be exempted therefrom. A 
handler is afforded the opportunity for a hearing on the petition. 
After the hearing, USDA would rule on the petition. The Act provides 
that the district court of the United States in any district in which 
the handler is an inhabitant, or has his or her principal place of 
business, has jurisdiction to review USDA's ruling on the petition, 
provided an action is filed not later than 20 days after the date of 
the entry of the ruling.
    This proposal invites comments on using an estimated trade demand 
figure, rather than a computed trade demand figure, to calculate volume 
regulation percentages, if necessary, for 2010-11 crop NS raisins 
covered under the order. This proposed rule would provide parameters 
for implementing volume regulation, if necessary, for 2010-11 crop NS 
raisins for the purposes of maintaining a portion of the industry's 
export markets and stabilizing the domestic market. This action was 
unanimously recommended by the committee at a meeting on May 13, 2010.

Volume Regulation Authority

    The order provides authority for volume regulation, which is 
designed to promote orderly marketing conditions, stabilize prices and 
supplies, and improve producer returns. When volume regulation is in 
effect, a percentage of the California raisin crop may be sold by 
handlers to any market (free tonnage), while the remaining percentage 
must be held by handlers in a reserve pool (reserve) for the account of 
the committee.
    Reserve raisins are disposed of through various programs authorized 
under the order, consistent with Sec.  989.67(b), which specifies that 
reserve raisins shall be disposed of by the committee: (1) By sale to 
handlers for sale in specified outlets or for resale to exporters for 
sale in export outlets; (2) By direct sale to any agency of the U.S. 
government for noncompetitive use; (3) By direct sale to foreign 
government agencies or foreign importers in approved countries; (4) by 
gift; and (5) By any other means consistent with the provisions of this 
section, and in outlets noncompetitive with those for free tonnage 
raisins. The reserve pool's equity holders (primarily producers) are 
the beneficiaries of reserve raisin sales.
    Section 989.54 of the order prescribes procedures and time frames 
to be followed in establishing volume regulation for each crop year, 
which runs from August 1 through July 31. The committee must meet on or 
before

[[Page 47491]]

August 15 to review data regarding raisin supplies. At that time, the 
committee computes a trade demand for each varietal type of raisins for 
which a free tonnage percentage might be recommended. This is referred 
to as the ``computed trade demand,'' and is defined in the order as 90 
percent of the prior year's domestic and export shipments, minus the 
carry-in inventory from the prior year, plus the desirable carry-out 
inventory for the end of the current year.
    Paragraph (e) of Sec.  989.54 contains a list of factors that the 
committee must consider when computing volume regulation percentages. 
Subparagraph 4 of Sec.  989.54(e) specifies that the committee shall 
consider the estimated trade demand for raisins in free tonnage 
outlets, if the estimated trade demand is different than the computed 
trade demand. Further, section 989.154(b) of the order's rules and 
regulations currently provides parameters for use of an estimated trade 
demand for the 2007-08 crop year.

Establishing Volume Regulation

    On or before October 5, the committee must announce preliminary 
crop estimates and determine whether volume regulation is warranted for 
the various varietal types for which it computed trade demand. 
Preliminary volume regulation percentages are then computed to release 
85 percent of the computed trade demand, if a field price for raisins 
has been established; or 65 percent of the trade demand, if no field 
price for raisins has been established. The field price, also known as 
the ``free tonnage price'' for raisins is the price that handlers pay 
producers for the free tonnage portion of their crop.
    On or before February 15 of the following year, the committee must 
recommend final free and reserve percentages that will tend to release 
the full trade demand.

10 Plus 10 Offers

    When volume regulation is in effect, the order also requires that 
two offers of reserve raisins be made to handlers for free use. These 
offers are known as the ``10 plus 10'' offers. Each offer consists of a 
quantity of reserve raisins equal to 10 percent of the prior year's 
shipments. The order also specifies that 10 plus 10 raisins must be 
sold to handlers at the current field price plus a 3 percent surcharge 
and committee costs, which has historically added $100 to the field 
price cost of reserve raisins on a 10 plus 10 sale.

Development of Export Markets

    Volume regulation has been utilized for NS raisins in all but 11 
crop years since the order's inception in 1949. The procedures for 
determining volume regulation percentages have been modified over the 
years to address the changing needs of the industry. Volume regulation 
has historically been an effective tool for managing an oversupply of 
raisins. Further, the use of reserve pool raisins and their related 
industry promotional activities has assisted the industry in the 
development of the demand for California raisins in export markets.

                     Table 1--Natural Seedless Deliveries, Field Prices, and Domestic and Export Shipments in Natural Condition Tons
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        Domestic
                           Crop year                               Deliveries       Field prices        shipments     Export shipments   Percent export
--------------------------------------------------------------------------------------------------------------------------------------------------------
2009-10*......................................................           297,467            $1,323           157,278           127,793                45
2008-09.......................................................           364,268             1,310           200,775           131,587                40
2007-08.......................................................           329,288             1,210           201,355           148,243                42
2006-07.......................................................           282,999             1,210           203,889           109,727                35
2005-06.......................................................           319,126             1,210           195,822           102,632                34
2004-05.......................................................           265,262             1,210           205,002           112,996                36
2003-04.......................................................           296,864               810           191,376           112,860                37
2002-03.......................................................           388,010               745           189,160           108,480                36
2001-02.......................................................           377,328               880           186,361           112,272                38
2000-01.......................................................           432,616               877           185,429           109,598                37
1999-00.......................................................           299,910             1,425           166,127            97,342                37
1998-99.......................................................           240,469             1,290           181,666           115,234                39
1997-98.......................................................           382,448             1,250           185,745           124,349                40
1996-97.......................................................           272,063             1,220           198,167           117,719                37
1995-96.......................................................           325,911             1,160           198,517           116,653                37
1994-95.......................................................           378,427             1,160           199,760           119,968                38
1993-94.......................................................           387,007             1,155           214,852           122,085               36
--------------------------------------------------------------------------------------------------------------------------------------------------------
* 2009-10 data is for a partial crop year, from August 1, 2009, through May 2010.

    The raisin industry uses various terms to describe the weight of 
raisins in a container. The term, ``natural condition tons,'' as used 
in Table 1, is synonymous with ``sweatbox tons,'' while ``packed tons'' 
consists of natural condition tons converted to a packed weight. 
``Packed tons'' can be 5 to 10 percent lighter (5.188 percent has been 
established by the committee as appropriate for the 2009-10 crop year), 
due to the inherent loss of moisture, the removal of stems, branches, 
etc., as raisins move from the field to the packed box. This reduction 
in weight is referred to as ``shrink.'' For convenience and 
consistency, tonnage is provided as ``natural condition tons,'' unless 
specified as ``packed tons.''
    In addition, data from the 1985-86 crop year through the 1992-93 
crop year indicates that exports of California NS raisins averaged 
about 34 percent of the industry's total NS raisin shipments per year, 
excluding government purchases. Thus, according to the historical data 
and information from the sixteen years in the above table, the 
percentage of export shipments compared to total shipments has 
continued to increase overall, demonstrating the importance of the 
export market to the California raisin industry.

Export Replacement Offer

    One market development program operated through reserve pools, the 
Export Replacement Offer (ERO), helps U.S. raisins to be price 
competitive in export markets. Prices in export markets are generally 
lower than in the domestic market. The ERO began in the early 1980's as 
a ``raisin-back'' program whereby handlers who exported California 
raisins could purchase, at a reduced price, reserve raisins for free

[[Page 47492]]

use. This effectively blended down the cost of the raisins that were 
exported, seeking to equate the cost of acquired free tonnage raisins 
with the reduced value of raisins in the export market. During the 
1994-95 crop year, the NS raisin ERO was half raisin-back and half 
cash-back and changed in 1996 to a ``cash-back'' program, whereby 
exporting handlers could qualify for cash reimbursements from the 
reserve pool for their export shipments.
    The ERO has been a cash-back program in all years since then, 
except for 2000, 2001, and a portion of 2002, 2008, and 2009. During 
2000 and 2001 a raisin-back program was used and during 2002, 2008, and 
2009 both ``cash-back'' and ``raisin-back'' programs were implemented. 
Assets for financing the cash-back program largely accrue from the 10 
plus 10 sales of reserve raisins. Since 2005, an average of $60.6 
million of reserve pool assets (cash and raisins) have been used to 
support exports of about 115,000 packed tons of NS raisins annually in 
both cash-back and raisin-back programs.

Current Industry Situation

    Export shipments of California raisins have been extraordinarily 
high during the 2009-10 crop year due to light worldwide production of 
raisins, a weak U.S. dollar, and successful industry marketing efforts. 
These significantly-higher shipments will result in an unusually high 
computed trade demand for the 2010-11 crop year.
    The committee is also concerned that the 2010-11 crop may be 
reduced because of a continuing trend of grapevine removals since 2004, 
at a rate of approximately 7,000 acres per year; unseasonable rain and 
cool temperatures this spring; and the potential for higher prices in 
the wine and juice markets, which compete for grapes with the raisin 
industry. In addition, the European Grape Vine Moth has recently been 
found in the Central Valley of California, a major and highly-
concentrated growing area. This pest has the potential for significant 
grape losses, should it become established. Even without significant 
damage in the short-run, a 96-square-mile quarantine area has already 
been established, which currently restricts the movement of the grape 
crop out of those areas. The industry does not yet know the effects 
this or subsequent quarantines may have on raisins.
    Thus, with the potential for a higher computed trade demand and a 
smaller crop, volume regulation may not be warranted for 2010-11 NS 
raisins, based on the order's computed trade demand formula, mandated 
in Sec.  989.54(a).
    The effective marketing of California raisins requires strategies 
and approaches which address both the domestic and the export markets. 
If a 2010-11 reserve pool is not established, the industry would not be 
able to continue the ERO program and support its export sales. The 
committee is concerned that the industry could lose one-third or more 
of its export market without an ERO program. Further, handlers who 
could not sell their raisins into the export market would likely sell 
their raisins into the domestic market. Annual domestic shipments of NS 
raisins for the past sixteen years have averaged about 194,000 tons. 
The committee is concerned that raisins necessarily diverted from the 
export market into the domestic market could create instability in the 
short term.

Implementing Volume Regulation To Maintain the ERO Under Adverse Trade 
Demand or Supply Situations

    Based on the above-described considerations, the committee 
unanimously recommended using an estimated trade demand for the 2010-11 
crop NS raisins to compute volume regulation percentages, creating a 
reserve if the crop estimate is equal to, less than, or no more than 10 
percent greater than the computed trade demand; provided that the final 
reserve percentage computed using such estimated trade demand shall be 
no more than 10 percent, and no reserve shall be established if the 
final 2010-11 NS raisin crop estimate is less than 110 percent of the 
previous crop year's domestic shipments. At that level, the needs of 
the domestic market would be met, as would a portion of the export 
market, when combined with the available carry-in of raisins from the 
2009-10 crop.
    To illustrate how this would work, the committee would compute a 
trade demand for NS raisins on or before August 15. At that time, the 
committee would also announce its intention to use an estimated trade 
demand to compute volume regulation percentages, if the 2010-11 NS 
raisin crop estimate is at least 110 percent of the previous year's 
domestic shipments, but no more than 10 percent greater than the 
computed trade demand. An estimated trade demand would allow for the 
establishment of no more than a 10 percent reserve which would be used 
to fund the Export Replacement Offer (ERO) program.

Crop Estimate Is Less Than 110 Percent of the Previous Year's Domestic 
Shipments--No Regulation

    Under the committee's proposal, if the 2010-11 crop estimate is 
less than 110 percent of the previous year's domestic shipments, no 
volume regulation would be recommended. With a crop estimate of 215,000 
tons, for example, and an average of about 80,000 tons of NS raisins 
estimated to be carried forward from the 2009-10 crop year, a supply of 
approximately 295,000 tons of raisins could be available for the 2010-
11 crop year. This is lower than the average annual NS raisin shipments 
from Table 1 of approximately 310,000 tons, excluding government 
purchases. With such an available supply, the committee believes that 
the industry's first priority would be to satisfy the needs of the 
domestic market, which absorbs an annual average of about 195,000 tons. 
Assuming that 195,000 tons were shipped domestically, there would be 
100,000 tons available to ship into the export market.

Crop Estimate Equal to 110 Percent of the Previous Year's Domestic 
Shipments and No More Than 10 Percent Above the Computed Trade Demand--
Volume Regulation

    If the October 2010-11 crop estimate for NS raisins is 110 percent 
or more of the previous year's domestic shipments and no more than 10 
percent above the computed trade demand, the committee would use an 
estimated trade demand figure to compute preliminary free and reserve 
percentages for the 2010-11 crop.
    The committee would compute final free and reserve percentages no 
later than February 15. Under this proposal, if an estimated trade 
demand figure is used to compute those percentages, the final reserve 
percentage would not exceed 10 percent of the estimated crop. Producers 
would ultimately be paid the prevailing free-tonnage price for raisins 
on 90 percent of their crop--the free tonnage portion.
    The reserve would be offered for sale to handlers in the 10 plus 10 
offers. However, since the order specifies that each offer consists of 
a quantity of reserve raisins equal to 10 percent of the prior year's 
shipments, under this situation, the available limited volume would not 
meet this requirement. In that instance, all of the raisins held in 
reserve would be made available to handlers for free use through the 10 
plus 10 offers, nonetheless.
    Under any other situations than those described herein, the 
committee would rely on the computed trade demand to

[[Page 47493]]

calculate volume regulation percentages.

Summary of the Proposed Regulation

    It is anticipated that allowing the committee to use an estimated 
trade demand to compute volume regulation percentages for 2010-11 crop 
year NS raisins under adverse trade demand or supply situations would 
enable the industry to supply the domestic market and maintain a 
limited export program. The committee proposed the following criteria 
for establishing volume regulation for the 2010-11 crop year:
    (1) If the crop estimate is below 110 percent of the previous 
year's domestic shipments, no volume regulation would be implemented. 
If this occurs, it is probable that the needs of the domestic market 
would be met first, but demand in the export markets would likely not 
be satisfied;
    (2) If the crop is equal to 110 percent of the previous year's 
domestic shipments and no more than 10 percent above the computed trade 
demand, a small reserve pool could be established to allow the industry 
to not only satisfy the needs of the domestic market, but also maintain 
a portion of its export sales. By maintaining an ERO program, even at a 
reduced level, exporting raisin handlers could continue to be price 
competitive, sell their raisins abroad, and endeavor to maintain the 
export market on a long-term basis. The domestic marketing would remain 
stable because raisin supplies would be consistent, but not flooded 
with raisins that would normally be exported; and
    (3) Under any other circumstances, the committee would utilize the 
computed trade demand.

Initial 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 initial regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, order, and rules issued thereunder, are unique in 
that they are brought about through group action of essentially small 
entities acting on their own behalf.
    There are approximately 26 handlers of California raisins who are 
subject to regulation under the order and approximately 3,000 raisin 
producers in the regulated area. The Small Business Administration (13 
CFR 121.201) defines small agricultural service firms as those having 
annual receipts of less than $7,000,000, and small agricultural 
producers as those having annual receipts of less than $750,000. Based 
upon shipment data and a recent survey conducted by the committee, 
approximately 18 handlers and a majority of producers of California 
raisins may be classified as small entities.
    This rule would revise Sec.  989.154(b) of the order's 
administrative rules and regulations by establishing the parameters for 
using an estimated trade demand figure specified in Sec.  989.54(e)(4) 
of the order to compute volume regulation percentages for the 2010-11 
crop NS raisins. Section 989.154(b) would provide guidelines for the 
use of estimated trade demand in lieu of computed trade demand in 
certain situations for the purposes of maintaining a portion of the 
industry's export markets and stabilizing the domestic market.
    Regarding the impact of the action on producers and handlers, under 
the committee's proposal, if an estimated trade demand figure were used 
to compute volume regulation percentages, the final reserve percentage 
would compute to no more than 10 percent. Producers would thus be paid 
the free tonnage price for raisins for at least 90 percent of their 
crop. No more than 10 percent of their crop would go into a reserve 
pool. The free tonnage price for NS raisins for the past 17 years 
depicted on Table 1 has averaged $1,144 per ton.
    Handlers, in turn, would purchase 90 percent of their raisins 
directly from producers at the free tonnage price for raisins, but 
would have to buy remaining raisins out of the committee's reserve pool 
at a higher price (field price plus 3 percent and committee costs). The 
10 plus 10 price of NS reserve raisins has averaged about $100 higher 
than the free tonnage price for raisins for the past 5 years, or $1,353 
per ton. Proceeds from the 10 plus 10 sales are used to support export 
sales.
    While there may be some initial costs for both producers and 
handlers under the above scenario, the long-term benefits of this 
action are expected to outweigh the costs. The committee believes that 
with no reserve pool, and hence, no ERO program, export sales would 
decline. With no export program, handlers would necessarily divert 
raisins normally destined for export markets into the domestic market, 
which typically absorbs about 194,000 tons annually. Additional NS 
raisins sold into the domestic market could destabilize the industry's 
primary market in the short run.
    Committee members have commented that once the industry's export 
markets are lost, it is difficult and costly to recover those sales in 
the short run. As noted previously, export shipments have increased 
over the past sixteen years to over 45 percent of all shipments.
    Raisins are generally used as an ingredient in baked goods, 
cereals, and snacks. Typically, buyers prefer reliable and consistent 
supplies from year to year and from product to product. Once buyers 
lose their regular supplies and switch to different ingredients and/or 
sources, they may not switch back readily. Thus, the loss of a portion 
of the export markets could compound into greater losses long term.
    Export markets for raisins are highly competitive. The U.S. and 
Turkey are the world's leading producers of raisins. Turkey exports 
approximately 76 percent of its total production, and represents an 
alternative source for raisin buyers. During the 2009-10 crop year, 
Turkish raisin production was 280,000 tons, down from 310,000 for the 
2008-09 crop year. Exports of California NS raisins during the 2009-10 
crop year were extraordinarily high due to marketing efforts by the 
handlers and the RAC, low worldwide production in other dried grape 
growing regions, the value of the dollar, and the high quality of 
California raisins.
    Maintaining the industry's export markets would help the industry 
maximize its 2010-11 total shipments of NS raisins, and reduce the 
possibility of carrying forward large quantities of inventory into the 
2011-12 crop year. If the industry is unable to maximize its 2010-11 
shipments of NS raisins, carry-in inventory could be high. Reduced 
shipments and high carry-in would result in a lower computed trade 
demand figure for the 2011-12 crop year; and, ultimately, a lower free 
tonnage percentage. Since NS raisin producers benefit more from those 
raisins which are free tonnage, a lower free tonnage percentage would 
result in reduced returns to producers. If 2010-11 returns to producers 
are reduced, this, coupled with the risks of rain, labor shortages 
during harvest, and the unknown effects of the European Grape Vine 
Moth, may influence producers to sell their raisin-variety fresh grapes 
to alternate market outlets: fresh, wine, or juice concentrate markets. 
Additional supplies to those alternate market outlets have the 
potential to reduce returns, as well.

[[Page 47494]]

Alternatives to This Proposed Rule

    The committee discussed alternatives to this change. One option 
considered was using one of the three prior year's domestic shipments 
to compute trade demand, pursuant to Sec.  989.54(a) of the order. 
However, the order permits this only if the prior year's domestic 
shipments were limited due to crop conditions. Since 2009-10 shipments 
have increased, the committee concluded this option was not viable.
    Another alternative considered was utilizing the computed trade 
demand formula in the order and using all available funds to support 
the ERO. However, the committee estimates that the funds remaining from 
the 2009-10 reserve pool would only support the ERO through August 
2010, which would leave the industry without assets to support an ERO 
for eleven months of the season.
    A third alternative considered was to maintain the existing 
language from Sec.  989.154(b) and making it applicable to the 2010-11 
crop year. (Section 989.154(b) currently authorizes the committee to 
use an estimated trade demand for the 2008-09 season only.) However, 
merely making a recommendation to change the applicable crop year did 
not address the potential needs of the industry. The existing language 
limited the committee by mandating that no reserve would be established 
if the 2010-11 crop estimate were less than 215,000 natural condition 
tons. After a series of discussions from two subcommittees, the 
committee determined that a more appropriate lower threshold for 
utilizing estimated trade demand would be 110 percent of the prior 
year's domestic shipments rather than a fixed quantity of 215,000 tons.
    This proposed rule provides parameters for implementing volume 
regulation, if necessary, for 2010-11 crop NS raisins for the purposes 
of stabilizing the domestic market and maintaining a portion of the 
industry's export markets.
    Accordingly, this action would not impose any additional reporting 
or recordkeeping requirements on either small or large raisin handlers. 
As with all Federal marketing order programs, reports and forms are 
periodically reviewed to reduce information requirements and 
duplication by industry and public sector agencies.
    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.
    USDA has not identified any relevant Federal rules that duplicate, 
overlap or conflict with this proposed rule.
    In addition, the committee's Rulemaking Work Group and the 
Administrative Issues Subcommittee each deliberated this issue at their 
meetings on May 11 and May 13, 2010, respectively, prior to the 
committee's meeting on May 13, 2010. All three meetings were widely 
publicized throughout the raisin industry, and all interested persons 
were invited to attend the meetings and encouraged to participate in 
subcommittee and committee deliberations on all issues. Like all 
subcommittee and committee meetings, the May 11 and 13, 2010, meetings 
were public meetings; and all entities, both large and small, were able 
to express their views on this issue. Finally, interested persons are 
invited to submit comments on this proposed rule, including the 
regulatory and informational impacts of this action on small 
businesses.
    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/MarketingOrdersSmallBuinessGuide.
    Any questions about the compliance guide should be sent to 
Antoinette Carter at the previously mentioned address in the FOR 
FURTHER INFORMATION CONTACT section.
    A 15-day comment period is provided to allow interested persons to 
respond to this proposal. Fifteen days is deemed appropriate because 
this action, if adopted, should be in place by the beginning of the 
2010-11 crop year, August 1. All written comments timely received will 
be considered before a final determination is made on this matter.

List of Subjects in 7 CFR Part 989

    Grapes, Marketing agreements, Raisins, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 989 is 
proposed to be amended as follows:

PART 989--RAISINS PRODUCED FROM GRAPES GROWN IN CALIFORNIA

    1. The authority citation for 7 CFR part 989 continues to read as 
follows:

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

    2. In Sec.  989.154, paragraph (b) is revised to read as follows:


Sec.  989.154  Marketing policy computations.

* * * * *
    (b) Estimated trade demand. Pursuant to Sec.  989.54(e)(4), 
estimated trade demand is a figure different than the trade demand 
computed according to the formula in Sec.  989.54(a). The Committee 
shall use an estimated trade demand to compute preliminary and interim 
free and reserve percentages, or determine such final percentages for 
recommendation to the Secretary for the 2010-11 crop year of Natural 
(sun-dried) Seedless (NS) raisins if the crop estimate is equal to, 
less than, or no more than 10 percent greater than the computed trade 
demand: Provided, That the final reserve percentage computed using such 
estimated trade demand shall be no more than 10 percent, and no reserve 
shall be established if the final 2010-11 NS raisin crop estimate is 
less than 110 percent of the previous crop year's domestic shipments.

    Dated: August 2, 2010.
David R. Shipman,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 2010-19369 Filed 8-5-10; 8:45 am]
BILLING CODE P