[Federal Register: June 25, 2003 (Volume 68, Number 122)]
[Rules and Regulations]
[Page 37726-37730]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25jn03-3]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 930
[Docket No. FV03-930-2 FR]
Tart Cherries Grown in the States of Michigan, et al.; Increased
Assessment Rate
AGENCY: Agricultural Marketing Service, USDA.
[[Page 37727]]
ACTION: Final rule.
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SUMMARY: This rule increases the assessment rate for tart cherries that
are utilized in the production of tart cherry products other than
juice, juice concentrate, or puree from $0.00175 to $0.0019 per pound.
It also increases the assessment rate for cherries utilized for juice,
juice concentrate, or puree from $0.000875 to $0.0019 per pound. The
single assessment rate for all assessable tart cherries was recommended
by the Cherry Industry Administrative Board (Board) under Marketing
Order No. 930 for the 2002-2003 and subsequent fiscal periods. The
Board is responsible for local administration of the marketing order
which regulates the handling of tart cherries grown in the production
area. Authorization to assess tart cherry handlers enables the Board to
incur expenses that are reasonable and necessary to administer the
program. The fiscal period began July 1, 2002, and ends June 30, 2003.
The assessment rate would remain in effect indefinitely unless
modified, suspended, or terminated.
EFFECTIVE DATE: This final rule becomes effective: June 26, 2003.
FOR FURTHER INFORMATION CONTACT: Patricia A. Petrella or Kenneth G.
Johnson, Marketing Order Administration Branch, Fruit and Vegetable
Programs, AMS, USDA, Suite 2A04, Unit 155, 4700 River Road, Riverdale,
MD 20737, telephone: (301) 734-5243, or Fax: (301) 734-5275; or George
Kelhart, Technical Advisor, Marketing Order Administration Branch,
Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW.,
STOP 0237, Washington, DC 20250-0237; telephone: (202) 720-2491, or
Fax: (202) 720-8938.
Small businesses may request information on complying with this
regulation by contacting Jay Guerber, Marketing Order Administration
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence
Avenue, SW, STOP 0237, Washington, DC 20250-0237; telephone: (202) 720-
2491, Fax: (202) 720-8938, or e-mail: Jay.Guerber@usda.gov.
SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing
Agreement and Order No. 930 (7 CFR part 930), regulating the handling
of tart cherries grown in the States of Michigan, New York,
Pennsylvania, Oregon, Utah, Washington, and Wisconsin, hereinafter
referred to as the ``order.'' The marketing agreement and order are
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 final rule in
conformance with Executive Order 12866.
This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. Under the marketing order now in effect, tart
cherry handlers are subject to assessments. Funds to administer the
order are derived from such assessments. It is intended that the
assessment rate as issued herein would be applicable to all assessable
tart cherries beginning July 1, 2002, and continue until amended,
suspended, or terminated. This final rule will not preempt any State or
local laws, regulations, or policies, unless they present an
irreconcilable conflict with this final rule.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 608c(15)(A) of the
Act, any handler subject to an order may file with 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. Such
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 final rule increases the assessment rate established for the
Board for the 2002-2003 and subsequent fiscal periods for cherries that
are utilized in the production of tart cherry products other than
juice, juice concentrate, or puree from $0.00175 to $0.0019 per pound
of cherries. The assessment rate for cherries utilized for juice, juice
concentrate, or puree would also be increased from $0.000875 to $0.0019
per pound.
The tart cherry marketing order provides authority for the Board,
with the approval of USDA, to formulate an annual budget of expenses
and collect assessments from handlers to administer the program. The
members of the Board are producers and handlers of tart cherries. They
are familiar with the Board's needs and with the costs for goods and
services in their local area and are thus in a position to formulate an
appropriate budget and assessment rate or rates as appropriate.
Assessment rates are formulated and discussed in a public meeting.
Thus, all directly affected persons have an opportunity to participate
and provide input.
For the 2001-2002 fiscal period, the Board recommended, and USDA
approved, assessment rates that will continue in effect from fiscal
period to fiscal period unless modified, suspended, or terminated by
the USDA upon recommendation and information submitted by the Board or
other information available to USDA.
Section 930.42(a) of the order authorizes a reserve sufficient to
cover one year's operating expenses. The increased uniform rate is
expected to generate enough income to meet the Board's operating
expenses in 2002-2003.
The Board met on January 24, 2002, and unanimously recommended
2002-2003 expenditures of $522,500. The Board also recommended that an
assessment rate of $0.0019 be established for all tart cherry products
if an amendment to do so passed in a May 2002 referendum of producers
and processors. The amendment passed and was finalized by USDA on
August 8, 2002 (67 FR 51698). The provisions requiring the
establishment of different assessment rates for different products were
removed. In their place, the Board is required to consider the volume
of cherries used in making various products and the relative market
value of those products in deciding whether the assessment rate should
be a single, uniform rate applicable to all cherries or whether varying
rates should be recommended for cherries manufactured into different
products. Prior to the amendment passing in referendum, USDA issued a
proposed rule on June 10, 2002 (67 FR 39637) proposing a dual
assessment rate at higher amounts ($0.0021 and $0.00105, respectively,
for high and low value cherry products) since the authority for a
uniform assessment rate amendment was not yet effective. A rule
withdrawing that proposal was published on April 2, 2003 (68 FR 15971).
This proposal reflects the amended provisions and the Board's January
24, 2002, recommendation.
The amended assessment provisions allow the Board to recommend a
uniform single assessment rate for all assessable tart cherries
handled, or variable rates depending on the quantities and values of
the cherries used in the various products. A two-tiered assessment rate
scheme may be appropriate in some years, but it may not be in others.
[[Page 37728]]
The amended order specifically provides that under Sec.
930.41(f)(1) and (2) the established assessment rates may be uniform,
or may vary depending on the product the cherries are used to
manufacture. The Board may consider the differences in the number of
pounds of cherries utilized for various cherry products and the
relative market values of such cherry products. The Board considered
the above items and decided that one assessment rate should be
recommended for all assessable tart cherries for the 2002-2003 fiscal
period.
According to the Board, processors have developed a strong market
for juice and concentrate products over the past few years. There is
considerable belief that juice will be one of the growth outlets for
tart cherries. This derives from the industry's promotional efforts
being undertaken for juice and concentrate products, the segmentation
of the market into retail and industrial components and the
nutritional/nutraceutical profile of the product. As a result, there
has been an increase in consumer recognition, acceptance, purchases,
and the value of tart cherry juice and concentrate. According to the
Board, prices received for tart cherry juice concentrate are now $25.00
per gallon or more. This is derived by using the fairly common
conversion ratio of 100 pounds to the gallon for mid-west production,
which has a raw product value of $0.25 per pound. Using a 50 gallon
conversion for the product, as has been used on the west coast, this
represents a per pound value of $0.50. The difference in the west and
mid-west conversion factors is that tart cherries produced in the
western United States generally have a higher sugar content and larger
fruit size, thus fewer raw product is needed. The average grower price
received ranges between $0.17 to $0.20 per pound.
According to the Board, puree products are as valuable and
comparable to juice and juice concentrate products. The Board reported
that the spot price for single strength puree for 2001-02 was about
$0.60 cents per pound. The raw product equivalent (RPE) volume of
pureed fruit was 539,504 pounds which is about 0.15 percent of all
processed fruit. The Board also reported for 2001-02 that the price for
five plus one product was $0.67 cents per pound. Five plus one is a
product of cherries and sugar which is manufactured by many processors
(25 pounds of cherries and five pounds of sugar to make a 30 pound
commercial container). It is the main product that handlers produce.
Five plus one cherries are primarily sold and remanufactured into
assorted bakery items, canned pie fill, and dried cherries. Since
juice, juice concentrate, and puree are not considered to be low value
products at this time, the Board considers one assessment to be
appropriate. It is important to understand that product is moved around
between production areas and may be converted into puree or concentrate
at a later date. The market drives the processing of these various
products each season.
In comparing the prices of juice, juice concentrate, and puree with
the 5 plus 1 product, the Board determined that current prices for
these products are similar. The information received from the Board
indicates that puree products are becoming a viable market and should
be assessed at a higher assessment rate.
As a result of this season's 2002-2003 short crop, much of the tart
cherry products released from inventory were in the form of tart cherry
juice and/or juice concentrate. There is not much, if any, of this
product available on the market today. The Board contends that given
these factors, it is hard to suggest that juice/concentrate, or puree,
are of lesser value than are the more traditional products such as pie-
fill or individually quick frozen tart cherries. Thus, the Board
determined that one assessment rate is appropriate for the 2002-03
fiscal period.
Last year's budgeted expenditures were $442,500. The recommended
assessment rate of $0.0019 is higher than the current rates of $0.00175
for cherries used in the production of other than juice, juice
concentrate, or puree products, and $0.000875 for cherries used for
juice, juice concentrate or puree products.
The major expenditures recommended by the Board for the 2002-2003
fiscal period include $85,000 for meetings, $170,000 for compliance,
$185,000 for personnel, $80,000 for office expenses, and $2,500 for
industry educational efforts. Budgeted expenses for those items in
2001-2002 were $80,000 for meetings, $100,000 for compliance, $185,000
for personnel, $75,000 for office expenses, and $2,500 for industry
educational efforts, respectively. As discussed below, the Board's
staff has taken steps to reduce actual expenditures for 2002-03 due to
the assessment revenue shortfall. The recommended assessment rate of
$0.0019 is higher than the current rates of $0.00175 and $0.000875,
respectively. The Board recommended an increased assessment rate to
generate larger revenue to meet its expenses and keep its reserves at
an acceptable level.
In deriving the recommended assessment rate, the Board determined
assessable tart cherry production for the fiscal period at 260 million
pounds. However, the tart cherry industry experienced a severe frost,
mainly in Michigan, which significantly reduced the crop. The tart
cherry industry is expected to only produce 60 million pounds. The
Board staff has responded to this decrease in funds by reducing staff
and Committee travel for meetings and used reserve funds to continue
administrative operations this season. Therefore, total assessment
income for 2002-2003 is estimated at $114,000. This amount plus
adequate funds in the reserve and interest income would be adequate to
cover budgeted expenses. Funds in the reserve (approximately $233,000)
would be kept within the approximately six months' operating expenses
as recommended by the Board consistent with Sec. 930.42(a).
The assessment rate established in this final rule will continue in
effect indefinitely unless modified, suspended, or terminated by USDA
upon recommendation and other information submitted by the Board or
other available information.
Although the assessment rate is effective for an indefinite period,
the Board will continue to meet prior to or during each fiscal period
to recommend a budget of expenses and consider recommendations for
modification of the assessment rate. The dates and times of Board
meetings are available from the Board or the USDA. Board meetings are
open to the public and interested persons may express their views at
these meetings. USDA will evaluate Board recommendations and other
available information to determine whether modification of the
assessment rate is needed. Further rulemaking would be undertaken as
necessary. The Board's 2002-2003 budget and those for subsequent fiscal
periods would be reviewed and, as appropriate, approved by the USDA.
A minor change is made to the provisions of Sec. 930.200 as
proposed for clarification purposes.
The Regulatory Flexibility Act and Effects on Small Businesses
The Agricultural Marketing Service (AMS) has considered the
economic impact of this action on small entities and has prepared this
final regulatory flexibility analysis. The Regulatory Flexibility Act
(RFA) allows AMS to certify that regulations do not have a significant
economic impact on a substantial number of small entities. However, as
a matter of general policy, AMS's Fruit and Vegetable Programs
[[Page 37729]]
(Programs) no longer opts for such certification, but rather performs
regulatory flexibility analyses for any rulemaking that would generate
the interest of a significant number of small entities. Performing such
analyses shifts the Programs' efforts from determining whether
regulatory flexibility analyses are required to the consideration of
regulatory options and economic or regulatory impacts.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and the rules issued thereunder, are unique in
that they are brought about through group action of essentially small
entities acting on their own behalf. Thus, both statutes have small
entity orientation and compatibility.
There are approximately 40 handlers of tart cherries who are
subject to regulation under the order and approximately 900 producers
of tart cherries in the regulated area. Small agricultural service
firms have been defined by the Small Business Administration (13 CFR
121.201) as those having annual receipts less than $5,000,000, and
small agricultural producers are those whose annual receipts are less
than $750,000. A majority of the tart cherry handlers and producers may
be classified as small entities.
The Board unanimously recommended 2002-2003 expenditures of
$522,500 and assessment rate increases from $0.00175 to $0.0019 per
pound for cherries that are utilized in the production of tart cherry
products other than juice, juice concentrate, or puree, and from
$0.000875 to $0.0019 per pound for cherries utilized for juice, juice
concentrate, or puree.
This final rule increases the assessment rate established for the
Board and collected from handlers for the 2002-2003 and subsequent
fiscal periods for cherries that are utilized in the production of tart
cherry products to $0.0019 per pound. The quantity of assessable tart
cherries expected to be produced during the 2002-2003 crop year was
estimated at 260 million pounds. However, the tart cherry industry
experienced a severe frost, mainly in Michigan, which has significantly
reduced the crop. The tart cherry industry is expecting to only produce
60 million pounds during 2002-03. The Board staff has responded to this
decrease in funds by reducing staff and Committee travel for meetings
and is expected to use reserve funds to continue administrative
operations this season. Assessment income, based on this crop, along
with interest income and reserves, would be adequate to cover budgeted
expenses.
The major expenditures recommended by the Board for the 2002-2003
fiscal period include $85,000 for meetings, $170,000 for compliance,
$185,000 for personnel, $80,000 for office expenses, and $2,500 for
industry educational efforts. Budgeted expenses for those items in
2001-2002 were $80,000 for meetings, $100,000 for compliance, $185,000
for personnel, $75,000 for office expenses, and $2,500 for industry
educational efforts, respectively.
The Board discussed the alternative of continuing the existing
assessment rates, but concluded that would cause the amount in the
operating reserve to be reduced to an unacceptable level. It also
determined that a single uniform assessment rate for assessable tart
cherries was appropriate.
The principal demand for tart cherries is in the form of processed
products. Tart cherries are dried, frozen, canned, juiced, and pureed.
Data from the National Agricultural Statistics Service (NASS) states
that during the period 1995/96 through 2002/03, approximately 92
percent of the U.S. tart cherry crop, or 285.7 million pounds, was
processed annually. Of the 285.7 million pounds of tart cherries
processed, 58 percent was frozen, 30 percent was canned, and 12 percent
was utilized for juice.
Based on NASS data, acreage in the United States devoted to tart
cherry production has been trending downward. Since 1987/88 tart cherry
bearing acres have decreased from 50,050 acres, to 36,900 acres in the
2002/03 crop year. In 2002/03, 93 percent of domestic tart cherry
acreage was located in four States: Michigan, New York, Utah, and
Wisconsin. Michigan leads the nation in tart cherry acreage with 74
percent of the total production. Michigan produces about 75 percent of
the U.S. tart cherry crop each year. Tart cherry acreage in Michigan
decreased from 28,500 acres in 2000-2001, to 27,400 acres in 2002-2003.
A review of historical information and preliminary information
pertaining to the 2002-2003 fiscal period indicates that the grower
price could range between $0.448 and $0.45 cents per pound of tart
cherries. This is a high price due to the short crop this year.
Therefore, the estimated assessment revenue for the 2002-2003 fiscal
period as a percentage of total grower revenue could be less than one-
half of one percent.
While this action will impose additional costs on handlers, the
costs are in the form of assessments which are applied uniformly. Some
of the costs may also be passed on to producers. However, these costs
are offset by the benefits derived from the operation of the marketing
order. 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 January 24, 2002, meeting was a public meeting and
all entities, both large and small, were able to express views on this
issue.
Finally, interested persons were invited to submit information on
the regulatory and informational impacts of this action on small
businesses and no comments were received.
This action will impose no 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.
USDA has not identified any relevant Federal rules that duplicate,
overlap, or conflict with this rule.
A proposed rule concerning this action was published in the Federal
Register on May 22, 2003 (68 FR 27943). Copies of the rule were mailed
or sent via facsimile to all Board members and tart cherry handlers. In
addition, the rule was made available through the Internet by the
Office of the Federal Register and USDA. A 10-day comment period ending
June 2, 2003, was provided to allow interested persons to respond to
the proposal. No comments were received.
A small business guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html.
Any questions about the compliance
guide should be sent to Jay Guerber at the previously mentioned address
in the FOR FURTHER INFORMATION CONTACT section.
After consideration of all relevant matters presented, including
the information and recommendation submitted by the Board and other
available information, it is hereby found that this rule, as
hereinafter set forth, will tend to effectuate the declared policy of
the Act.
It is further found that good cause exists for not postponing the
effective date of this rule until 30 days after publication in the
Federal Register (5 U.S.C. 553) because the 2002-2003
[[Page 37730]]
fiscal period began on July 1, 2002, and ends on June 30, 2003, and the
marketing order requires that the rate of assessment for each fiscal
period apply to all assessable tart cherries handled during such fiscal
period. Further, handlers are aware of this action which was
unanimously recommended by the Board at a public meeting. Also, a 10-
day comment period was provided in the proposed rule and no comments
were received.
List of Subjects in 7 CFR Part 930
Marketing agreements, Reporting and recordkeeping requirements,
Tart cherries.
0
For the reasons set forth in the preamble, 7 CFR part 930 is amended as
follows:
PART 930--TART CHERRIES GROWN IN THE STATES OF MICHIGAN, NEW YORK,
PENNSYLVANIA, OREGON, UTAH, WASHINGTON, AND WISCONSIN
0
1. The authority citation for 7 CFR part 930 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
0
2. Section 930.200 is revised to read as follows:
Sec. 930.200 Handler assessment rate.
On and after July 1, 2002, the assessment rate imposed on handlers
shall be $0.0019 per pound of tart cherries grown in the production
area and utilized in the production of tart cherry products.
Dated: June 19, 2003.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 03-16138 Filed 6-24-03; 8:45 am]
BILLING CODE 3410-02-P