Tart Cherries Grown in the States of Michigan, et al.; Free and Restricted Percentages for the 2016-17 Crop Year for Tart Cherries, 14481-14485 [2017-05484]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 82, Number 53 (Tuesday, March 21, 2017)]
[Proposed Rules]
[Pages 14481-14485]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-05484]


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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. 82, No. 53 / Tuesday, March 21, 2017 / 
Proposed Rules

[[Page 14481]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 930

[Doc. No. AMS-SC-16-0105; SC16-930-5 PR]


Tart Cherries Grown in the States of Michigan, et al.; Free and 
Restricted Percentages for the 2016-17 Crop Year for Tart Cherries

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: This proposed rule would implement a recommendation from the 
Cherry Industry Administrative Board (Board) to establish free and 
restricted percentages for the 2016-17 crop year under the marketing 
order for tart cherries grown in the states of Michigan, New York, 
Pennsylvania, Oregon, Utah, Washington, and Wisconsin (order). The 
Board locally administers the marketing order and is comprised of 
producers and handlers of tart cherries operating within the production 
area, and a public member. This action would establish the proportion 
of tart cherries from the 2016 crop which may be handled in commercial 
outlets at 71 percent free and 29 percent restricted. These percentages 
should stabilize marketing conditions by adjusting supply to meet 
market demand and help improve grower returns.

DATES: Comments must be received by April 20, 2017.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments must be sent to the Docket Clerk, 
Marketing Order and Agreement Division, Specialty Crops Program, 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 document 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 proposal 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: Jennie M. Varela, Marketing 
Specialist, or Christian D. Nissen, Regional Director, Southeast 
Marketing Field Office, Marketing Order and Agreement Division, 
Specialty Crops Program, AMS, USDA; Telephone: (863) 324-3375, Fax: 
(863) 291-8614, or Email: Jennie.Varela@ams.usda.gov or 
Christian.Nissen@ams.usda.gov.
    Small businesses may request information on complying with this 
regulation by contacting Richard Lower, Marketing Order and Agreement 
Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue 
SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, 
Fax: (202) 720-8938, or Email: Richard.Lower@ams.usda.gov.

SUPPLEMENTARY INFORMATION: This proposal is issued under Marketing 
Agreement and Order No. 930, both as amended (7 CFR part 930), 
regulating the handling of tart cherries produced in the States of 
Michigan, New York, Pennsylvania, Oregon, Utah, Washington and 
Wisconsin, hereinafter referred to as the ``order.'' The order is 
effective under the Agricultural Marketing Agreement Act of 1937, as 
amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act.''
    The Department of Agriculture (USDA) is issuing this proposed rule 
in conformance with Executive Orders 12866, 13563, and 13175.
    This proposal has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the order provisions now in effect, free and 
restricted percentages may be established for tart cherries handled 
during the crop year. This proposed rule would establish free and 
restricted percentages for tart cherries for the 2016-17 crop year, 
beginning July 1, 2016, through June 30, 2017.
    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 proposed rule invites comments on the establishment of free 
and restricted percentages for the 2016-17 crop year. This proposal 
would establish the proportion of tart cherries from the 2016 crop 
which may be handled in commercial outlets at 71 percent free and 29 
percent restricted. This proposal should stabilize marketing conditions 
by adjusting supply to meet market demand and help improve grower 
returns. The proposed carry-out and the final percentages were 
recommended by the Board at a meeting on September 8, 2016.
    Section 930.51(a) of the order provides authority to regulate 
volume by designating free and restricted percentages for any tart 
cherries acquired by handlers in a given crop year. Section 930.50 
prescribes procedures for computing an optimum supply based on sales 
history and for calculating these free and restricted percentages. Free 
percentage volume may be shipped to any market, while restricted 
percentage volume must be held by handlers in a primary or secondary 
reserve, or be diverted or used for exempt purposes as prescribed in 
Sec. Sec.  930.159 and 930.162 of the regulations. Exempt purposes 
include, in part, the development of new products, sales into new 
markets, the development of export markets, and charitable 
contributions. Sections 930.55 through 930.57 prescribe procedures for 
inventory reserve. For cherries held in reserve, handlers would be 
responsible for storage and would retain title of the tart cherries.

[[Page 14482]]

    Under Sec.  930.52, only those districts with an annual average 
production over the prior three years of at least six million pounds 
are subject to regulation, and any district producing a crop which is 
less than 50 percent of its annual average of the previous five years 
is exempt. The regulated districts for the 2016-2017 crop year would 
be: District 1--Northern Michigan; District 2--Central Michigan; 
District 3--Southern Michigan; District 4--New York; District 7--Utah; 
District 8--Washington; and District 9--Wisconsin. Districts 5 and 6 
(Oregon and Pennsylvania, respectively) would not be regulated for the 
2016-17 season.
    Demand for tart cherries and tart cherry products tends to be 
relatively stable from year to year. Conversely, annual tart cherry 
production can vary greatly. In addition, tart cherries are processed 
and can be stored and carried over from crop year to crop year, further 
impacting supply. As a result, supply and demand for tart cherries are 
rarely in balance.
    Because demand for tart cherries is inelastic, total sales volume 
is not very responsive to changes in price. However, prices are very 
sensitive to changes in supply. As such, an oversupply of cherries 
would have a sharp negative effect on prices, driving down grower 
returns. The Board, aware of this economic relationship, focuses on 
using the volume control provisions in the order to balance supply and 
demand to stabilize industry returns.
    Pursuant to Sec.  930.50 of the order, the Board meets on or about 
July 1 to review sales data, inventory data, current crop forecasts and 
market conditions for the upcoming season and, if necessary, to 
recommend preliminary free and restricted percentages if anticipated 
supply would exceed demand. After harvest is complete, but no later 
than September 15, the Board meets again to update its calculations 
using actual production data, consider any necessary adjustments to the 
preliminary percentages, and determine if final free and restricted 
percentages should be recommended to the Secretary.
    The Board uses sales history, inventory, and production data to 
determine whether there is a surplus, and if so, how much volume should 
be restricted to maintain optimum supply. The optimum supply represents 
the desirable volume of tart cherries that should be available for sale 
in the coming crop year. Optimum supply is defined as the average free 
sales of the prior three years plus desirable carry-out inventory. 
Desirable carry-out is the amount of fruit needed by the industry to be 
carried into the succeeding crop year to meet market demand until the 
new crop is available. Desirable carry-out is set by the Board after 
considering market circumstances and needs. Section 930.151(b) 
specifies that desirable carry-out can range from 0 to a maximum of 100 
million pounds.
    In addition, USDA's ``Guidelines for Fruit, Vegetable, and 
Specialty Crop Marketing Orders'' (https://www.ams.usda.gov/publications/content/1982-guidelines-fruit-vegetable-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 requirement is codified in Sec.  
930.50(g) of the order, which specifies that in years when restricted 
percentages are established, the Board shall make available tonnage 
equivalent to an additional 10 percent of the average sales of the 
prior three years for market expansion (market growth factor).
    After the Board determines optimum supply, desirable carry-out, and 
market growth factor, it must examine the current year's available 
volume to determine whether there is an oversupply situation. Available 
volume includes carry-in inventory (any inventory available at the 
beginning of the season) along with that season's production. If 
production is greater than the optimum supply minus carry-in, the 
difference is considered surplus. This surplus tonnage is divided by 
the sum of production in the regulated districts to reach a restricted 
percentage. This percentage must be held in reserve or used for 
approved diversion activities, such as exports.
    The Board met on June 23, 2016, and computed an optimum supply of 
287 million pounds for the 2016-17 crop year using the average of free 
sales for the three previous seasons and a desirable carry-out of 57 
million pounds. The Board determined three months of sales would be a 
good estimate for what was needed at the end of the season, as there is 
a three-month gap between the calculation of carry-out at the end of 
one season and the availability of fruit from the next season. The 
recommended carry-out of 57 million pounds is approximately a quarter 
of average annual sales.
    The Board then subtracted the estimated carry-in of 81.3 million 
pounds from the optimum supply to calculate the production needed from 
the 2016-17 crop to meet optimum supply. This number, 205.7 million 
pounds, was subtracted from the Board's estimated 2016-17 production of 
351.3 million pounds to calculate a surplus of 145.6 million pounds of 
tart cherries. The Board also complied with the market growth factor 
requirement by adding 23 million pounds (average sales for prior three 
years of 230 million times 10 percent) to the free supply. The surplus 
minus the market growth factor was then divided by the expected 
production in the regulated districts (348 million pounds) to reach a 
preliminary restricted percentage of 35 percent for the 2016-17 crop 
year.
    The Board then discussed whether this calculation would provide 
sufficient supply to grow sales while being able to supply orders that 
are already scheduled, including filling remaining orders from a USDA 
purchase made the previous season. The Board, after considering 
anticipated supply needs for the 2016-17 season, decided to make an 
economic adjustment of 22 million pounds to increase the available 
supply of tart cherries. This economic adjustment further reduced the 
preliminary surplus to 100.6 million pounds. After these adjustments, 
the preliminary restricted percentage was recalculated as 29 percent 
(100.6 million pounds divided by 348 million pounds).
    The Board met again on September 8, 2016, to consider final volume 
regulation percentages for the 2016-17 season. The final percentages 
are based on the Board's reported production figures and the supply and 
demand information available in September. The total production for the 
2016-17 season was 341 million pounds, 10 million pounds below the 
Board's June estimate. In addition, growers diverted 26 million pounds 
in the orchard, leaving 315 million pounds available to market, 310 
million pounds of which are in the restricted districts. Using the 
actual production numbers, and accounting for the recommended desirable 
carry-out and economic adjustment, as well as the market growth factor, 
the restricted percentage was recalculated.
    The Board subtracted the carry-in figure used in June of 81.3 
million pounds from the optimum supply of 287 million pounds to 
determine 205.7 million pounds of 2016-17 production would be necessary 
to reach optimum supply. The Board subtracted the 205.7 million pounds 
from the actual production of 341.3 million pounds, resulting in a 
surplus of 135.6 million pounds of tart cherries. The surplus was then 
reduced by subtracting the economic adjustment of 22 million pounds and 
the market growth factor of 23 million pounds, resulting in an adjusted 
surplus of 90.6 million pounds. The Board then divided this final 
surplus by the available production of 310 million pounds in the 
regulated

[[Page 14483]]

districts (336.1 million pounds minus 26.4 million pounds of in-orchard 
diversion) to calculate a restricted percentage of 29 percent with a 
corresponding free percentage of 71 percent for the 2016-17 crop year, 
as outlined in the following table:

------------------------------------------------------------------------
                                                            Millions of
                                                              pounds
------------------------------------------------------------------------
Final Calculations:
  (1) Average sales of the prior three years............           230.0
  (2) Plus desirable carry-out..........................            57.0
  (3) Optimum supply calculated by the Board............           287.0
  (4) Carry-in as of July 1, 2016.......................            81.3
  (5) Adjusted optimum supply (item 3 minus item 4).....           205.7
  (6) Board reported production.........................           341.3
  (7) Surplus (item 6 minus item 5).....................           135.6
  (8) Total economic adjustments........................            22.0
  (9) Market growth factor..............................            23.0
  (10) Adjusted Surplus (item 7 minus items 8 and 9)....            90.6
  (11) Supply in regulated districts....................           336.1
  (12) In-Orchard Diversion.............................            26.4
  (13) Production minus in orchard diversion............           309.7
------------------------------------------------------------------------
                                                                 Percent
------------------------------------------------------------------------
Final Percentages:
  Restricted (item 10 divided by item 13 x 100).........              29
  Free (100 minus restricted percentage)................              71
------------------------------------------------------------------------

    The primary purpose of setting restricted percentages is an attempt 
to bring supply and demand into balance. If the primary market is 
oversupplied with cherries, grower prices decline substantially. 
Restricted percentages have benefited grower returns and helped 
stabilize the market as compared to those seasons prior to the 
implementation of the order. The Board believes the available 
information indicates that a restricted percentage should be 
established for the 2016-17 crop year to avoid oversupplying the market 
with tart cherries. Consequently, based on its discussion of this issue 
and the result of the above calculations, the Board recommended final 
percentages of 71 percent free and 29 percent restricted by a vote of 
16 in favor, 2 opposed, and 2 abstentions.
    Though production came in below the Board's June estimate, the 
initial restriction percentage remained the same due to the substantial 
in-orchard diversion. During the discussion of the proposed 
restriction, several members supported the proposed percentages as 
there was no change from the preliminary 29 percent restriction 
recommended in June. They believed deviating from the percentages 
announced in June would be disruptive to the industry, as processors 
have already made agreements with growers.
    Another member noted when there was a crop failure in 2012, there 
was not enough reserve to maintain sales and warned against being 
unprepared in the future. The member also noted that in the last four 
years, even with volume regulation and an increase in imported 
products, overall domestic sales have increased since 2013, including 
modest growth in both juice and piefill.
    Some members opposed to the proposed restriction expressed concern 
regarding competition from imported tart cherry juice concentrate. In 
particular, they were concerned that the additional volume from imports 
is not accounted for in the Optimum Supply Formula, thus not capturing 
overall supply and demand.
    Others were of the opinion that the Board's recent actions to 
expand the use of diversion credits in new markets or through grower 
diversion were allowing the industry to remain competitive without 
making additional adjustments to supply. Another member countered that 
not all handlers are helped by new market diversion credits and cannot 
sell all of their product under a restriction.
    When asked how much of the market currently being served by imports 
could be supplied by the domestic handlers, some members stated they 
could utilize the full adjusted calculated surplus of 90.6 million 
pounds. Others noted that trying to compete for those markets by 
matching the price of imported concentrate would drop grower returns to 
an unsustainable level.
    One member summarized that, although there is a carrying cost for 
storing restricted fruit, and the industry appears to be at a trade 
disadvantage, the Board should account for those factors all the while 
focusing on continuing to grow sales. Though there was much discussion 
regarding the market impact of imports, there was no motion made by any 
Board member to make a further economic adjustment to the calculation 
based on imported product.
    After reviewing the available data, and considering the concerns 
expressed, the Board determined that a 29 percent restriction with a 
carry-out volume of 57 million pounds would meet sales needs and 
establish some reserves without oversupplying the market. Thus, the 
Board recommended establishing final percentages of 71 percent free and 
29 percent restricted. The Board could meet and recommend the release 
of additional volume during the crop year if conditions so warranted.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) 
has considered the economic impact of this proposed rule 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 
businesses 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.
    There are approximately 600 producers of tart cherries in the 
regulated area and approximately 40 handlers of tart cherries who are 
subject to regulation under the order. Small agricultural producers are 
defined by the Small Business Administration (SBA) as those having 
annual receipts of less than $750,000 and small agricultural service 
firms have been defined as those whose annual receipts are less than 
$7,500,000 (13 CFR 121.201).
    According to the National Agricultural Statistics Service (NASS) 
and Board data, the average annual grower price for tart cherries 
during the 2015-16 season was approximately $0.347 per pound. With 
total utilization at 251.1 million pounds, the total 2015-16 crop value 
is estimated at $87 million. Dividing the crop value by the estimated 
number of producers (600) yields an estimated average annual receipt 
per producer of $145,000. This is well below the SBA threshold for 
small producers. In 2015, The Food Institute estimated a free on board 
(f.o.b.) price of $0.96 per pound for frozen tart cherries, which make 
up the majority of processed tart cherries. Multiplying the f.o.b price 
by total utilization of 251.1 million pounds results in an estimated 
handler-level tart cherry value of $241 million. Dividing this figure 
by the number of handlers (40) yields an estimated average annual 
handler receipts of $6 million, which is below the SBA threshold for 
small agricultural service firms. Assuming a normal distribution, the 
majority of producers and handlers of tart cherries may be classified 
as small entities.
    The tart cherry industry in the United States is characterized by 
wide, annual

[[Page 14484]]

fluctuations in production. According to NASS, the pounds of tart 
cherry production for the years 2012 through 2015 were 85 million, 291 
million, 301 million, and 251 million, respectively. Because of these 
fluctuations, supply and demand for tart cherries are rarely equal.
    Demand for tart cherries is inelastic, meaning changes in price 
have a minimal effect on total sales volume. However, prices are very 
sensitive to changes in supply, and grower prices vary widely in 
response to the large swings in annual supply, with prices ranging from 
a low of 7.3 cents per pound in 1987 to a high of 59.4 cents per pound 
in 2012.
    Because of this relationship between supply and price, 
oversupplying the market with tart cherries would have a sharp negative 
effect on prices, driving down grower returns. The Board, aware of this 
economic relationship, focuses on using the volume control authority in 
the order to align supply with demand and stabilize industry returns. 
This authority allows the industry to set free and restricted 
percentages as a way to bring supply and demand into balance. Free 
percentage cherries can be marketed by handlers to any outlet, while 
restricted percentage volume must be held by handlers in reserve, 
diverted or used for exempted purposes.
    This proposal would control the supply of tart cherries by 
establishing percentages of 71 percent free and 29 percent restricted 
for the 2016-17 crop year. These percentages should stabilize marketing 
conditions by adjusting supply to meet market demand and help improve 
grower returns. The proposal would regulate tart cherries handled in 
Michigan, New York, Utah, Washington, and Wisconsin. The authority for 
this action is provided for in Sec. Sec.  930.50, 930.51(a) and 930.52 
of the order. The Board recommended this action at a meeting on 
September 8, 2016.
    This proposal would result in some fruit being diverted from the 
primary domestic markets. However, as mentioned earlier, the USDA's 
``Guidelines for Fruit, Vegetable, and Specialty Crop Marketing 
Orders'' (https://www.ams.usda.gov/publications/content/1982-guidelines-fruit-vegetable-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 
that would be available under this proposal is greater than 110 percent 
of the average quantity shipped in the prior three years.
    In addition, there are secondary uses available for restricted 
fruit, including the development of new products, sales into new 
markets, the development of export markets, and being placed in 
reserve. While these alternatives may provide different levels of 
return than the sales to primary markets, they play an important role 
for the industry. The areas of new products, new markets, and the 
development of export markets utilize restricted fruit to develop and 
expand the markets for tart cherries. In 2015-16, these activities 
accounted for over 27 million pounds in sales, 12 million of which were 
exports.
    Placing tart cherries into reserves is also a key part of balancing 
supply and demand. Although handlers bear the handling and storage 
costs for fruit in reserve, reserves stored in large crop years are 
used to supplement supplies in short crop years. The reserves allow the 
industry to mitigate the impact of oversupply in large crop years, 
while allowing the industry to maintain supply to markets in years when 
production falls below demand. Further, storage and handling costs are 
more than offset by the increase in price when moving from a large crop 
to a short crop year.
    In addition, the Board recommended an increased carry-out of 57 
million pounds and made a demand adjustment of 22 million pounds in 
order to make the regulation less restrictive. Even with the 
recommended restriction, over 300 million pounds of fruit would be 
available to the domestic market. Consequently, it is not anticipated 
that this proposal would unduly burden growers or handlers.
    While this proposal could result in some additional costs to the 
industry, these costs are more than outweighed by the benefits. The 
purpose of setting restricted percentages is to attempt to bring supply 
and demand into balance. If the primary market (domestic) is 
oversupplied with cherries, grower prices decline substantially. 
Without volume control, the primary market would likely be 
oversupplied, resulting in lower grower prices.
    The three districts in Michigan, along with the districts in New 
York, Utah, Washington, and Wisconsin, are the restricted areas for 
this crop year with a combined total production of 310 million pounds. 
A 29 percent restriction means 220 million pounds would be available to 
be shipped to primary markets from these five states. The 220 million 
pounds from the restricted districts, 5 million pounds from the 
unrestricted districts (Oregon and Pennsylvania), and the 81 million 
pound carry-in inventory would make a total of 306 million pounds 
available as free tonnage for the primary markets. This is similar to 
the 305 million pounds of free tonnage made available last year. This 
would be enough to cover the 251 million pounds of total utilization in 
2015-2016, while providing substantial carry-out. Further, the Board 
could meet and recommend the release of additional volume during the 
crop year if conditions so warranted.
    Prior to the implementation of the order, grower prices often did 
not cover the cost of production. The most recent costs of production 
determined by representatives of Michigan State University are an 
estimated $0.33 per pound. To assess the impact that volume control has 
on the prices growers receive for their product, an econometric model 
has been developed. Based on the model, the use of volume control would 
have a positive impact on grower returns for this crop year. With 
volume control, grower prices are estimated to be approximately $0.06 
per pound higher than without restrictions. In addition, absent volume 
control, the industry could start to build large amounts of unwanted 
inventories. These inventories would have a depressing effect on grower 
prices.
    Retail demand is assumed to be highly inelastic, which indicates 
that changes in price do not result in significant changes in the 
quantity demanded. Consumer prices largely do not reflect fluctuations 
in cherry supplies. Therefore, this proposal should have little or no 
effect on consumer prices and should not result in a reduction in 
retail sales.
    The free and restricted percentages established by this proposal 
would provide the market with optimum supply and apply uniformly to all 
regulated handlers in the industry, regardless of size. As the 
restriction represents a percentage of a handler's volume, the costs, 
when applicable, are proportionate and should not place an extra burden 
on small entities as compared to large entities.
    The stabilizing effects of this proposal would benefit all handlers 
by helping them maintain and expand markets, despite seasonal supply 
fluctuations. Likewise, price stability positively impacts all growers 
and handlers by allowing them to better anticipate the revenues their 
tart cherries would generate. Growers and handlers, regardless of size, 
would benefit from the stabilizing effects of this restriction. In 
addition, the increased carry-out should provide processors enough 
supply to meet market needs going into the next season.
    The Board considered alternatives in its preliminary restriction 
discussions that affected this recommended action.

[[Page 14485]]

Regarding demand, the Board began with the actual sales average of 230 
million pounds. However, the Board noted that some previously 
contracted sales would be due for delivery in the coming season. In 
order to avoid undersupplying the market, the Board determined that the 
calculation of the optimum supply should include an additional 
adjustment for that purpose. After discussion, an adjustment of an 
additional 22 million pounds was made the 2016-17 available supply of 
tart cherries as it was determined that this amount would best meet the 
industry's sales needs. Thus, the other alternative levels were 
rejected.
    Regarding the carry-out value, the Board considered a range of 
alternatives. One member suggested the Board begin with 57 million 
pounds, approximately a quarter of average annual sales. Other members 
suggested alternatives as high as 70 million pounds. However, some 
members were concerned about leaving too much fruit on the market at 
the end of the season and depressing prices going into the next year. 
The Board determined three months of sales would be a good estimate for 
what was needed at the end of the season, as there is a three-month gap 
between the calculation of carry-out at the end of one season and the 
availability of fruit from the next season. Thus, the other 
alternatives were rejected.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the order's information collection requirements have been 
previously approved by the Office of Management and Budget (OMB) and 
assigned OMB No. 0581-0177, Tart Cherries Grown in the States of 
Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and 
Wisconsin. No changes in those requirements as a result of this action 
are necessary. Should any changes become necessary, they would be 
submitted to OMB for approval.
    This proposal would not impose any additional reporting or 
recordkeeping requirements on either small or large tart cherry 
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 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 June 23, 2016, and September 8, 
2016, meetings were public meetings and all entities, both large and 
small, were able to express views on this issue. Finally, interested 
persons are invited to submit comments on this proposed rule, including 
the regulatory and informational impacts of this proposal 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/rules-regulations/moa/small-businesses. Any questions 
about the compliance guide should be sent to Richard Lower at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    A 30-day comment period is provided to allow interested persons to 
respond to this proposal. Thirty days is deemed appropriate because 
this proposed rule would need to be in place as soon as possible since 
handlers are already shipping tart cherries from the 2016-17 crop. All 
written comments timely received will be considered before a final 
determination is made on this matter.

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 
proposed to be 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 930.151 is revised to read as follows:


Sec.  930.151  Desirable carry-out inventory.

    For the 2016 crop year, the desirable carry-out inventory, for the 
purposes of determining an optimum supply volume, will be 57 million 
pounds.
0
3. Revise Sec.  930.256 to read as follows:


Sec.  930.256  Free and restricted percentages for the 2016-17 crop 
year.

    The percentages for tart cherries handled by handlers during the 
crop year beginning on July 1, 2016, which shall be free and 
restricted, respectively, are designated as follows: Free percentage, 
71 percent and restricted percentage, 29 percent.

    Dated: March 15, 2017.
Bruce Summers,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 2017-05484 Filed 3-20-17; 8:45 am]
 BILLING CODE 3410-02-P