83_FR_46246 83 FR 46069 - Cranberries Grown in States of Massachusetts, et al.; Establishment of 2018-19 Seasonal Volume Regulation

83 FR 46069 - Cranberries Grown in States of Massachusetts, et al.; Establishment of 2018-19 Seasonal Volume Regulation

DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service

Federal Register Volume 83, Issue 177 (September 12, 2018)

Page Range46069-46075
FR Document2018-19825

This rule implements a recommendation to establish a grower allotment percentage for the 2018-19 crop year and allows for the diversion of processed products from that year under the marketing order for cranberries grown in the production area (Order). This action also specifies handlers subject to the regulation, revises the definition of outlets for excess fruit, revises dates by which certain actions are due, and establishes exemptions to the action.

Federal Register, Volume 83 Issue 177 (Wednesday, September 12, 2018)
[Federal Register Volume 83, Number 177 (Wednesday, September 12, 2018)]
[Rules and Regulations]
[Pages 46069-46075]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-19825]



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Rules and Regulations
                                                Federal Register
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having general applicability and legal effect, most of which are keyed 
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Federal Register / Vol. 83, No. 177 / Wednesday, September 12, 2018 / 
Rules and Regulations

[[Page 46069]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 929

[Doc. No. AMS-SC-18-0012; SC18-929-2 FR]


Cranberries Grown in States of Massachusetts, et al.; 
Establishment of 2018-19 Seasonal Volume Regulation

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule implements a recommendation to establish a grower 
allotment percentage for the 2018-19 crop year and allows for the 
diversion of processed products from that year under the marketing 
order for cranberries grown in the production area (Order). This action 
also specifies handlers subject to the regulation, revises the 
definition of outlets for excess fruit, revises dates by which certain 
actions are due, and establishes exemptions to the action.

DATES: Effective October 12, 2018.

FOR FURTHER INFORMATION CONTACT: Doris Jamieson, 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: Doris.Jamieson@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 final rule, pursuant to 5 U.S.C. 553, 
amends regulations issued to carry out a marketing order as defined in 
7 CFR 900.2(j). This final rule is issued under Marketing Agreement and 
Order No. 929, as amended (7 CFR part 929), regulating the handling of 
cranberries grown in the States of Massachusetts, Rhode Island, 
Connecticut, New Jersey, Wisconsin, Michigan, Minnesota, Oregon, 
Washington, and Long Island in the State of New York. Part 929 
(referred to as 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 Cranberry Marketing 
Committee (Committee) locally administers the Order and is comprised of 
growers of cranberries operating within the production area, and a 
public member.
    The Department of Agriculture (USDA) is issuing this final rule in 
conformance with Executive Orders 13563 and 13175. This action falls 
within a category of regulatory actions that the Office of Management 
and Budget (OMB) exempted from Executive Order 12866 review. 
Additionally, because this final rule does not meet the definition of a 
significant regulatory action, it does not trigger the requirements 
contained in Executive Order 13771. See OMB's Memorandum titled 
``Interim Guidance Implementing Section 2 of the Executive Order of 
January 30, 2017 titled `Reducing Regulation and Controlling Regulatory 
Costs'[thinsp]'' (February 2, 2017).
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Order provisions provide that the Committee may 
recommend and implement, subject to USDA approval, volume control 
regulation which would decrease the available supply of cranberries 
whenever the Secretary of Agriculture (Secretary) finds that ``such 
regulation will tend to effectuate the declared policy of the Act.'' 
Accordingly, this rule establishes a marketable quantity and grower 
allotment percentage for cranberries produced during the 2018-19 crop 
year, beginning September 1, 2018, and ending August 31, 2019.
    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 final rule establishes a marketable quantity and grower 
allotment percentage for the 2018-19 crop year. This rule is the result 
of the Committee's recommendations made during its August 4, and August 
31, 2017, meetings, and a February 18, 2018, email vote. This rule 
establishes a marketable quantity of 7.275 million barrels and a grower 
allotment percentage of 75 percent. This action also allows handlers to 
process up to 50 percent of the excess cranberries they receive above 
their growers' allotment, provided they divert an equivalent amount of 
2018-19 cranberry processed products. It also establishes an exemption 
for organically grown cranberries, specifies handlers subject to the 
regulation, revises the definition of outlets for excess fruit, and 
revises dates by which certain actions are due.
    The Committee also recommended an exemption for organically grown 
cranberries, and an exemption of 2,500 barrels for each grower. After 
much consideration, USDA determined the recommended grower exemption of 
2,500 barrels should be revised. Consequently, this final rule does not 
include the exemption of 2,500 barrels for each grower and instead 
exempts handlers that processed less than 125,000 barrels during the 
2017-18 fiscal year, or handlers that did not have carryover inventory 
at the end of the 2017-18 fiscal year. Accordingly, growers delivering 
their fruit to exempt handlers are not subject to the allotment.
    In addition, in a February 18, 2018, vote by email, the Committee 
voted unanimously to adjust reporting dates associated with the 
allotment regulation. These changes were previously discussed and 
supported by the Committee at a meeting on April 22,

[[Page 46070]]

2014, as part of the consideration of another volume regulation for 
which a rule was not issued.
    The recommendations included in this rule will adjust supply to 
more closely meet market demand, improve grower and handler returns, 
and help reduce inventory.
    Sections 929.49 and 929.52 provide, in part, authority to establish 
a marketable quantity and grower allotment percentage. Section 929.14 
defines marketable quantity as the volume of cranberries needed to meet 
market demand and provide for an adequate carryover into the next 
season. The allotment percentage is derived by dividing the marketable 
quantity by the total of all growers' sales histories. Section 929.48 
outlines procedures for computing a grower's sales history.
    Section 929.49 also prescribes how the grower allotment percentage 
is calculated and distributed to growers and handlers. Each grower's 
allotment volume is calculated by multiplying the individual's sales 
history by the allotment percentage. A grower's allotment is the total 
volume a handler may purchase from, or handle on behalf of, that grower 
during a year of volume regulation. Cranberries received by a handler 
that exceed the sum of their growers' allotments can be used to fill 
unused allotment. Any remaining cranberries are defined as excess 
cranberries as defined in Sec.  929.59, which also outlines the 
procedures and dates by which excess cranberries are to be diverted. 
Section 929.61 prescribes outlets for excess cranberries, which are 
further defined in Sec.  929.104.
    In addition, Sec.  929.50 provides authority for the transfer of 
sales history and annual allotment. Section 929.51 requires the 
Committee to consider market conditions, including supply and demand, 
prior to recommending an allotment percentage, and that any 
recommendation be made by March 1. Section 929.58(a) provides the 
authority to exempt from any or all requirements the handling of 
cranberries in such minimum quantities as the Committee, with the 
approval of the Secretary, may prescribe. Section 929.58(b) provides, 
in part, the authority to exempt from any or all requirements the 
handling of cranberries of such forms or types, including organic 
cranberries, as the Committee, with the approval of the Secretary, may 
prescribe.
    Domestic cranberry production has been increasing over the past few 
years, up from 8.0 million barrels in 2012 to 9.6 million barrels in 
2016. During the last few years, demand has remained relatively flat, 
and has not kept pace with the increases in supply. This has led to 
increasing levels of inventories. Ending inventory levels increased 
from 5.8 million barrels in 2012 to 9.7 million barrels in 2016.
    Demand for cranberries is inelastic, meaning changes in consumer 
price have a minimal effect on total sales. However, grower prices are 
very sensitive to changes in supply. Consequently, higher inventory 
levels place downward pressure on grower prices for cranberries and 
reduce grower returns. Data reviewed by the Committee indicates that 
the price per barrel received by some growers has fallen from $30 a 
barrel in 2011 to $10 a barrel in 2016. With the cost of production 
estimated at approximately $35 a barrel, for many growers returns have 
fallen below the cost of production.
    The Committee met on August 4, 2017, and again on August 31, 2017, 
and discussed the estimated levels of supply and demand and how market 
conditions were impacting the industry. The Committee discussed the 
approximate levels of production for the 2017-18 season, forecasting 
production at approximately 9.1 million barrels. Carryover inventory 
was estimated at approximately 9.9 million barrels and foreign acquired 
cranberries were expected to provide an additional 2.1 million barrels, 
for a total available supply of approximately 21.1 million barrels for 
the year. After accounting for shrinkage, the Committee agreed on an 
adjusted supply of 20.4 million barrels for the 2017-18 crop year.
    Using these numbers, with estimated sales of 9.5 million barrels 
for 2017-18, the Committee calculated a potential carryover for the 
2018-19 season of 10.9 million barrels. This is an approximately one 
million barrel increase from the carryover inventory for the 2017-18 
crop year. Based on these numbers, carryover inventory for the 2018-19 
crop year would be approximately 115 percent of annual sales.
    In discussing market conditions, the Committee recognized that 
sales have been relatively flat. The Committee also noted supply has 
been exceeding demand by about one million barrels a year. Using crop 
and sales estimates similar to 2017-18, and the estimated carryover 
from the 2017-18 season of 10.9 million barrels, the potential 
carryover supply at the end of the 2018-19 crop year could increase by 
another one million barrels to 11.9 million if no action is taken to 
regulate supply.
    In reviewing these numbers, the Committee agreed the industry is 
faced with a large inventory that continues to build. To address the 
problems associated with oversupply and to try to stabilize grower 
returns, the Committee discussed the need to establish volume 
regulation. The Committee considered several options, including 
establishing free and restricted percentages under a handler 
withholding for the 2017-18 crop year, establishing a grower allotment 
for the 2018-19 season, or recommending both regulations.
    Considering the levels of inventory and low grower returns, the 
Committee voted to recommend a handler withholding, setting the free 
and restricted percentages of 85 percent and 15 percent, respectively, 
for the 2017-18 season. AMS agreed with the Committee's analysis and 
recommendation and published the rule establishing these percentages in 
the Federal Register on April 4, 2018 (83 FR 14350). The Committee 
estimated that the 15 percent restriction would remove approximately 
one million barrels from inventory, helping to maintain inventories at 
current levels. While the Committee recognized a small restriction 
would not immediately balance supply with demand, even a small 
restriction would remove a portion of the volume from the market and 
help prevent an additional increase in inventory.
    With the handler withholding removing an estimated one million 
barrels from the market, the industry would still have approximately 10 
million barrels remaining in inventory. Given the static demand and 
anticipated market conditions for the 2018-19 fiscal year, the 
Committee also recommended establishing a grower allotment percentage 
for the 2018-19 fiscal year.
    The Committee discussed various levels of restriction, being 
sensitive to the impact volume control could have on small growers and 
handlers. Some small handlers are able to sell all their production 
each year and do not maintain an inventory. Several Committee members 
stated a large restriction would place a hardship on these small 
handlers. However, the Committee also recognized that volume control 
measures could help increase grower returns by helping to align supply 
with demand.
    In addition, establishing an allotment regulation can help growers 
reduce production costs. Growers could choose to take bogs out of 
production, or reduce inputs such as fertilizer and pesticides in order 
to reduce their production volume to match their allotment. These and 
other steps could help growers reduce their costs of production for the 
2018-19 crop.
    Based on the information available, the Committee recommended

[[Page 46071]]

establishing a marketable quantity of 7.275 million barrels and an 
allotment percentage of 75 percent for the 2018-19 crop year. With 
volume regulation, returns are expected to be higher than without 
volume regulation. This increase is beneficial to all growers and 
handlers regardless of size, and enhances total revenues in comparison 
to no volume regulation. Establishing an allotment percentage allows 
the industry to help stabilize supplies. This rule could remove a 
potential 2 million barrels from supply, reduce industry inventory, and 
increase industry returns. This rule adds a new Sec.  929.253 to 
establish the marketable quantity and grower allotment.
    The Committee also recommended that handlers have the option to 
receive cranberries over their grower allotment and process up to 50 
percent of the excess cranberries received rather than divert them in 
fresh form, as currently required. Handlers that do so need to divert 
an amount of 2018-19 cranberry processed products equivalent to the 
volume of excess cranberries processed.
    The Committee made this recommendation recognizing that processing 
fresh fruit to produce one of its top-selling items, sweetened dried 
cranberries (SDC), results in juice concentrate as a by-product. A 
significant amount of current inventory is in the form of juice 
concentrate. By allowing handlers to process a portion of the excess 
cranberries they receive, more fresh cranberries are available to 
produce products requiring whole cranberries, such as SDC, and the 
diversion of concentrate will help prevent additional build-up of 
inventory. Handlers still have the option to divert fresh berries as 
excess supply.
    To allow for the diversion of processed products, Sec.  929.104(b), 
which currently prohibits the handling of excess fruit, is removed. To 
ensure the diversion of processed products in lieu of fresh cranberries 
is correctly accounted for, the final rule for volume regulation for 
the 2017-18 season (83 FR 14350) adds guidance under Sec.  929.107 
along with a conversion table. The table recognizes different 
conversion equivalencies of cranberries to processed product based on 
the volume of Brix concentrate.
    Brix is the method for measuring the amount of sugar contained in 
the cranberry products, and the industry average for concentrate is 50 
Brix. The Committee acknowledged that the Brix level can vary depending 
on the growing region and farming practices. The table helps ensure 
that the diversion of processed product in lieu of fresh berries is 
applied equitably among all handlers.
    Using the conversion table, handlers can determine the amount of 
cranberry concentrate they need to divert, in lieu of fresh berries, to 
cover the fresh cranberry equivalent of any excess cranberries 
processed. Juice concentrate should comprise the vast majority of 
processed product used for diversion. Should requests be made to use 
other processed products for diversion, conversion rates for those 
products will be provided by the Committee based on information 
provided by the requesting handler.
    For example, a grower with a sales history of 1,000 barrels will 
have an allotment of 750 barrels (1,000 x .75). If the grower delivered 
all 1,000 barrels to the handler, the handler will have 250 barrels of 
excess fruit. Under this final rule, the handler could divert 250 
barrels of fresh fruit to approved outlets or divert half (125 barrels 
of fresh fruit) and process half, diverting a 125 barrel equivalent in 
2018-19 processed product.
    The Committee also recommended changes to date requirements 
currently specified in the Order. Section 929.59(b) currently states 
that ``prior to January 1, or such other date as recommended by the 
committee and approved by the Secretary, handlers holding excess 
cranberries shall submit to the committee a written plan outlining 
procedures for the systematic disposal of such cranberries in the 
outlets prescribed in Sec.  929.61.'' The Committee agreed the date for 
submitting disposal plans should be extended in order to give handlers 
more time to consider how to divert their excess cranberries. 
Therefore, the Committee recommended changing the deadline prescribed 
in Sec.  929.59(b) from January 1 to March 1 of the regulated season.
    Section 929.59(c) states that ``prior to March 1, or such other 
date as recommended by the committee and approved by the Secretary, all 
excess cranberries shall be disposed of pursuant to Sec.  929.61.'' 
Given the change in the due date for the diversion plans, the Committee 
agreed that this date should also be changed to provide handlers with 
enough time to comply with this requirement. Therefore, the Committee 
recommended changing the date by which diversion is to be completed 
from March 1 to August 31. AMS agrees with the Committee's analysis and 
recommendation and is issuing this rule to add a new Sec.  929.159 to 
make these date changes.
    Section 929.62(a) requires each grower to file a report with the 
Committee by January 15 of each year providing the following 
information: Total acreage harvested and whether owned or leased; total 
commercial cranberry sales in barrels from such acreage; the amount of 
acres either in production but not harvested, or taken out of 
production, and the reason(s) why; the amount of new or replanted 
acreage coming into production; the name of the handler(s) to whom 
commercial cranberry sales were made; and such other information as may 
be needed for implementation and operation of this section. Growers 
might not have all necessary information to complete the report by the 
current deadline. Therefore, the Committee recommended changing the 
grower reporting date from January 15 to March 1.
    The Committee also recommended organically grown cranberries be 
exempt from this regulation as they serve a niche market and represent 
a very small portion of the total crop. All other cranberry production, 
including fresh cranberries, are subject to regulation under the grower 
allotment volume regulation.
    To address the burden the volume regulation would have on small 
growers and handlers, the Committee also recommended providing an 
exemption of 2,500 barrels for all growers. Under the Committee's 
recommendation, the exemption would be applied following the 
calculation of a grower's allotment. However, after much consideration, 
USDA determined the exemption recommendation should be revised. Rather 
than provide an exemption of 2,500 barrels for each grower, this action 
exempts small handlers who processed less than 125,000 barrels from the 
allotment requirement. Further, handlers who did not have carryover 
inventory at the end of the 2017-18 fiscal year are also exempt from 
the allotment requirement. Accordingly, growers delivering their fruit 
to exempt handlers are not subject to the allotment.
    These changes allow handlers who have matched their production with 
market demand to continue to serve their customer base and maintain 
their market share. Small growers also have the option of delivering 
their fruit to handlers who are not subject to the regulation. Handlers 
subject to the allotment percentage should be able to meet any market 
shortfalls by utilizing cranberries or cranberry products available in 
inventory. The provision allowing handlers to process a portion of 
their excess cranberries also helps provide some flexibility.
    With this action, only those handlers carrying inventory are 
subject to

[[Page 46072]]

meeting the allotment requirement. In reviewing the Committee's 
recommendation and other available industry information, USDA has 
determined that existing inventories in excess of 9 million barrels are 
putting the most downward pressure on returns to both growers and 
handlers. Consequently, this rule puts more focus on reducing the 
volume in inventory.
    Section 929.125 provides authority for a grower to request a review 
by an appeals subcommittee if the grower is dissatisfied with his or 
her sales history calculation provided by the Committee. The grower 
must request the review within 30 days after receipt of the Committee's 
determination of sales history and must submit documentation showing 
why he or she believes the calculation is inaccurate. Within 15 days 
after notification of the appeals subcommittee's decision, if the 
grower is not satisfied with the decision, the grower may further 
appeal to the Secretary.
    A grower may transfer all or part of their allotment to another 
grower, provided that the transferred allotment remains assigned to the 
same handler. Transfers of allotment between growers having different 
handlers may occur with the consent of both handlers. All such 
transfers have to be reported to the Committee. After all allotment 
transfers have occurred, any unused allotment would be transferred to 
the Committee. The Committee would then redistribute any unused 
allotment to handlers having excess cranberries in an amount 
proportionate to each handler's total allotment. These provisions help 
ensure that excess supply is utilized, to the extent possible, through 
unfilled allotment.
    The Committee considered the estimated level of production and 
anticipated demand, and determined that without some action on the part 
of the Committee, inventory levels will continue to increase throughout 
the 2018-19 season. The Committee believes using the volume control 
authorities in the Order will help stabilize marketing conditions for 
cranberries by helping to adjust supply to meet market demand and 
improve grower returns.
    Accordingly, this final rule establishes a grower allotment at 75 
percent for the 2018-19 season. It also gives handlers the option to 
process up to 50 percent of the excess cranberries they receive above 
their growers' allotment, provided they divert an equivalent amount of 
2018-19 cranberry processed products. This final rule also exempts 
organically grown cranberries, specifies handlers subject to the 
regulation, revises the definition of outlets for excess fruit, and 
revises dates by which certain actions are due.

Final 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 action on small entities. 
Accordingly, AMS has prepared this final regulatory flexibility 
analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
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 1,100 cranberry growers in the regulated 
area and approximately 65 cranberry handlers subject to regulation 
under the Order. Small agricultural growers are defined by the Small 
Business Administration (SBA) as those having annual receipts of less 
than $750,000, and small agricultural service firms are defined as 
those whose annual receipts are less than $7,500,000 (13 CFR 121.201).
    According to industry and Committee data, the average grower price 
for cranberries during the 2016-17 season was $23.50 per barrel and 
total sales were approximately 9.5 million barrels. The value for 
cranberries that year totaled $223,250,000 ($23.50 per barrel 
multiplied by 9.5 million barrels). Taking the total value of 
production for cranberries and dividing it by the total number of 
cranberry growers provides an average return per grower of $202,955. 
Using the average price and utilization information, and assuming a 
normal distribution, the majority of cranberry growers receive less 
than $750,000 annually.
    According to USDA's Market News report, the average free on board 
(f.o.b.) price for cranberries was approximately $30.00 per barrel. 
Multiplying the f.o.b. price by total utilization of 9.5 million 
barrels results in an estimated handler-level cranberry value of $285 
million. Dividing this figure by the number of handlers (65) yields an 
estimated average annual handler receipt of $4.3 million, which is 
below the SBA threshold for small agricultural service firms. 
Therefore, the majority of growers and handlers of cranberries may be 
classified as small entities.
    While cranberry production has continued to rise, demand has failed 
to keep pace, and inventories have been increasing. In an industry such 
as cranberries, product can be stored in inventory for long periods of 
time. Large inventories are costly to maintain, difficult to market, 
and have a price-depressing effect. When supply outpaces demand and 
results in high levels of inventories, grower and handler returns can 
be negatively impacted.
    Demand for cranberries is inelastic, meaning changes in price have 
a minimal effect on total sales volume. However, grower prices are very 
sensitive to changes in supply. A grower allotment program results in a 
decrease in supply as handlers can only purchase a portion of a 
grower's production, which is based on the grower's past sales history. 
Even a small shift in supply can have a positive effect on grower 
prices. Therefore, using a grower allotment program to reduce supply 
should increase grower prices and revenues.
    This final rule establishes a grower allotment of 75 percent for 
the 2018-19 crop year. It also allows handlers to process up to 50 
percent of the excess cranberries they receive above their growers' 
allotment, provided they divert an equivalent amount of 2018-19 
cranberry processed products. In addition, this rule exempts 
organically grown cranberries, specifies handlers subject to the 
regulation, revises the definition of outlets for excess fruit, and 
revises dates by which certain actions are due. These actions are 
designed to help stabilize marketing conditions, reduce burdensome 
inventories, and improve grower and handler returns. This rule revises 
Sec. Sec.  929.104 and 929.105 and establishes new Sec. Sec.  929.159 
and 929.253. The authority for these actions is provided for in 
Sec. Sec.  929.48, 929.49, 929.51, 929.52, 929.58, 929.59, 929.61, and 
929.62. These changes are based on Committee recommendations from 
meetings on August 4 and August 31, 2017, and a February 18, 2018, 
email vote.
    While these actions could result in some additional costs to the 
industry, the benefits are expected to outweigh them. The purpose of 
establishing an allotment percentage is to address oversupply 
conditions and to stabilize grower prices. The industry has a 
significant volume in inventory, and this has had a negative impact on 
grower and handler returns. Without volume control, inventories will 
likely continue to increase, further lowering returns.

[[Page 46073]]

    Inventories have significantly increased since 2011. In 2011, 
existing inventories were around 4.6 million barrels. By the end of the 
2016-17 season, inventories were approximately 9.9 million barrels, and 
by the end of the 2017-18 season, inventories are projected to be 
approximately 10.9 million barrels. Inventories as a percentage of 
total sales have also been increasing from approximately 50 percent in 
2010 to approximately 103 percent in 2016, and could reach an 
anticipated 115 percent after the 2017-18 season. These inventories 
have had a depressing effect on grower prices, which for many growers 
have fallen below their cost of production.
    Retail demand for cranberries is highly inelastic, which indicates 
changes in consumer prices do not result in significant changes in the 
quantity demanded. Consumer prices are also not significantly impacted 
by minor changes in cranberry supplies. Therefore, this action should 
have little or no effect on consumer prices and should not result in a 
reduction in retail sales. However, even a small shift in supply could 
increase grower and handler returns. The use of allotment percentages 
will likely have a positive impact on grower and handler returns for 
this crop year.
    This rule will result in some fruit being taken off the market. 
However, a sufficient amount of fruit will still be available to supply 
all aspects of the market. In addition, allowing handlers the option to 
process up to 50 percent of the excess cranberries they receive above 
their growers' allotment, provided they divert an equivalent amount of 
2018-19 cranberry processed products, provides handlers some additional 
flexibility and may help reduce inventories of juice concentrate, one 
of the largest segments of existing inventory.
    There are also secondary outlets available for excess fruit, 
including foreign markets except Canada, charitable institutions, 
nonhuman food use, and research and development projects. While these 
alternatives may provide different levels of return than sales to 
primary markets, they play an important role for the industry. In 
addition, if demand is greater than anticipated, there are significant 
amounts of fruit in inventory that can be utilized to meet demand.
    This action also exempts small handlers who processed less than 
125,000 barrels in 2017-18 from the allotment percentage. Consequently, 
small handlers whose acquired volume is 125,000 barrels or less are 
exempt from the allotment volume restriction. This will reduce the 
burden the volume restriction has on small handlers and their growers.
    In addition, handlers who did not have carryover inventory at the 
end of the 2017-18 fiscal year are also exempt from the allotment 
percentage. This allows handlers that have matched their production 
with market demand to continue to serve their customer base and 
maintain their market share. Handlers subject to the restriction should 
be able to meet any shortfalls by utilizing cranberries or cranberry 
products they have in inventory.
    Further, making the recommendation to regulate the volume handled 
under a grower allotment program could result in some cost savings for 
growers depending upon what actions they may take to adjust supply.
    As the allotment represents a percentage of the grower's sales 
history, the costs, when applicable, are proportionate and should not 
place an extra burden on small entities as compared to large entities. 
Likewise, growers and handlers, regardless of size, benefit from the 
stabilizing effects of this action.
    One alternative considered by the Committee was not to impose a 
volume regulation during the 2018-19 crop year. However, Committee 
members believed that inventory levels were such that some form of 
volume control was necessary to help stabilize marketing conditions.
    The Committee also considered other allotment percentage levels. 
However, some members were concerned that setting an allotment 
percentage that was too restrictive could negatively impact small 
growers. The Committee also considered not recommending a provision to 
allow a percentage of excess cranberries to be processed into cranberry 
products. The Committee determined that allowing handlers to process up 
to 50 percent of the excess cranberries they receive above their 
growers' allotment would provide additional volumes of fresh 
cranberries for processing and would provide handlers some flexibility 
while not adding additional juice concentrate to the existing inventory 
levels. Therefore, for the reasons mentioned above, these alternatives 
were rejected by the Committee.
    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 OMB and assigned OMB No. 0581-0189, Fruit Crops. 
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 final rule will not impose any additional reporting or 
recordkeeping requirements on either small or large cranberry growers 
or 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.
    As noted in the initial regulatory flexibility analysis, USDA has 
not identified any relevant Federal rules that duplicate, overlap, or 
conflict with this final rule.
    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.
    In addition, the Committee's meetings were widely publicized 
throughout the cranberry industry and all interested persons were 
invited to attend the meetings and participate in Committee 
deliberations on all issues. Like all Committee meetings, the August 4, 
2017 and August 31, 2017 meetings were public meetings and all 
entities, both large and small, were able to express views on these 
issues.
    A proposed rule concerning this action was published in the Federal 
Register on April 27, 2018 (83 FR 18462). Copies of the proposed rule 
were sent via email to Committee members and cranberry handlers. 
Additionally, the rule was made available through the internet by USDA 
and the Office of the Federal Register. A 30-day comment period ending 
May 29, 2018, was provided to allow interested persons to respond to 
the proposal.
    During the comment period, 24 comments were received in response to 
the proposal. Of the comments received, 12 were in support of the 
regulation, but also requested some changes to the proposal, 11 were 
opposed to the regulation, and 1 took no position.
    Comments: In the comments that supported volume regulation, but 
with changes from what was included in the proposed rule, the 12 
commenters stated the volume regulation was a way to reduce supply and 
benefit the industry. These 12 comments also specifically supported the 
handler's flexibility to divert excess fruit, stating it would help 
handlers maximize the value of the fruit.
    The 12 comments also suggested handlers be allowed to divert 100 
percent of their excess fruit in processed form, rather than the 50 
percent allowed under the proposed rule. They stated

[[Page 46074]]

that with a significant amount of the current inventory in the form of 
juice concentrate, this would help prevent additional build-up of 
inventory.
    Response: While a significant portion of existing inventory is 
concentrate, not all handlers produce concentrate or concentrate as a 
byproduct of SDC production. Allowing the use of 50 percent of 2018-19 
cranberry products to meet the excess fruit restriction recognizes the 
need to reduce cranberry concentrate inventory, while also addressing 
the overall oversupply facing the industry.
    Comments: Eleven of these commenters also expressed that the 
exemption for small handlers does not help small growers. These 
commenters asked USDA to reconsider its decision to do away with the 
2,500 barrel exemption for each grower as recommended by the Committee.
    Response: In reviewing the Committee's recommendation and other 
available industry information, USDA has determined that existing 
inventories in excess of 9 million barrels are putting the most 
downward pressure on returns to both growers and handlers. 
Consequently, this rule puts more focus on reducing the volume in 
inventory, which should benefit both small growers and small handlers.
    Rather than provide an exemption of 2,500 barrels for each grower, 
an action which would have exempted nearly 2.75 million barrels, this 
action exempts small handlers who processed less than 125,000 barrels 
during the 2017-18 fiscal year from the allotment requirement. Small 
handlers processing less than 125,000 barrels make up nearly 88 percent 
of all handlers, yet combined, account for less than 10 percent of the 
total volume of cranberries processed. Based on Committee data, these 
small handlers were holding little or no volume in inventory at the end 
of the 2016-17 season. USDA's revisions to the Committee's proposal 
therefore exempts these handlers from the allotment requirement. 
Although focused on handlers, this change is expected to have a 
positive impact on grower returns by reducing overall supply in the 
market. Additionally, small growers would have the option of delivering 
their fruit to handlers who are not subject to the regulation.
    In addition, handlers who did not have carryover inventory at the 
end of the 2017-18 fiscal year are also exempt. USDA believes that this 
will allow handlers who have matched their production with market 
demand to continue to serve their customer base and maintain their 
market share. Only those handlers carrying inventory will be subject to 
meeting the allotment requirement.
    Handlers subject to the allotment percentage should be able to meet 
any market shortfalls by utilizing cranberries or cranberry products 
available in inventory. The provision allowing handlers to process a 
portion of their excess cranberries also helps provide some 
flexibility.
    Comment: Another comment stated they did not support using 2017 
deliveries to determine the 2018 exemptions, and that the no carryover 
inventory exemption is flawed.
    Response: Regarding using 2017-18 information to determine 2018-19 
exemptions, this is a grower's production allotment volume regulation. 
As such, it is important for growers to have an idea of what their 
allotment will be for the upcoming season. Growers can then use that 
information to make determinations regarding their production. By using 
the information from 2017-18, USDA provided growers with exemptions 
they could use to determine whether their production would be subject 
to the allotment, or the potential opportunity to choose to deliver 
their production to an exempt handler.
    Comments: Of the 11 comments in opposition of the proposed rule, 
five support the reinstatement of the 2,500 barrel exemption for each 
grower as discussed above. Four stated the proposed change would do 
little or nothing to accomplish USDA's stated goal of controlling the 
overage of cranberry concentrate.
    Response: Concentrate represents a large portion of existing 
inventory. However, at the end of the 2016-17 fiscal year, of the 
estimated 9.7 million barrels in inventory, approximately 4.2 million 
barrels were frozen berries, while approximately 3.7 million barrels 
were concentrate. The rule provides for the diversion of processed 
product to meet 50 percent of the restriction as a way to reduce the 
inventory of concentrate. However, reducing overall supply, including 
whole fruit, is also important in addressing the current level of 
inventory.
    Comments: Six comments stated that the proposed regulation would 
negatively impact independent growers and another stated that this 
would hurt small growers. Four commenters stated this regulation would 
adversely affect midsize handlers.
    Response: While these actions could result in some additional costs 
to the industry, the allotment percentage established by this rule 
applies uniformly to all those regulated, regardless of size. A 
grower's allotment is the total volume a handler may purchase from, or 
handle on behalf of, that grower during a year of volume regulation. 
Each grower's allotment volume is calculated by multiplying the 
individual's sales history by the allotment percentage. As the 
allotment percentage is applied to each grower's sales history, the 
costs, when applicable, are proportionate and should not place an extra 
burden on small entities as compared to large entities.
    Further, the benefits are expected to outweigh any additional costs 
and positively impact all growers and handlers, regardless of size. The 
industry has a significant volume in inventory, and this has had a 
negative impact on all grower and handler returns. If steps are not 
taken to reduce the level of inventory, these downward pressures will 
persist. The purpose of establishing the allotment percentage is to 
address the oversupply conditions which are negatively impacting 
industry returns. Generally, reducing supply levels results in prices 
increasing for growers and handlers. Therefore, lowering inventory 
levels is expected to result in positive returns for the entire 
industry.
    Comments: Four comments stated the shortage in the 2017 crop makes 
the grower allotment unnecessary and harmful, and the rule will create 
an artificial spike in market price for finished goods. Another 
commenter questioned regulating cranberries when Canadian production is 
not subject to the allotment.
    Response: In reviewing the Committee's recommendation and other 
available industry information, USDA has determined that existing 
inventory is putting the most downward pressure on returns to both 
growers and handlers. Even with the shortfall in the 2017 crop and the 
handler withhold established for the 2017-18 season, the industry will 
enter the 2018-19 season with inventory levels that will continue to 
negatively affect industry returns. In addition, existing inventory, 
combined with an additional 9 million barrels of anticipated 2017 
domestic production, will provide a more than ample domestic supply to 
meet sales requirements. Consequently, this regulation should have 
little effect on consumer prices. Moreover, while the Order does not 
regulate the volume of imports, given the current levels of available 
domestic supply, this rule is not expected to lead to an increase in 
imported product.
    Comment: One comment in opposition to the proposal stated it

[[Page 46075]]

would be implemented too late, as growers have already made their 
production decisions. It further stated the rule should be implemented 
next season when they have more time to make economic decisions 
relating to their crop.
    Response: Utilizing a production allotment allows growers to make 
adjustments to reduce their costs. Given the oversupply, it is 
important to take action on this issue. Further, growers have been 
aware of this recommendation for some time, and the proposed rule on 
this action published on April 27, 2018.
    Comment: Another commenter stated the proposed regulation 
originated from the major cooperative.
    Response: As stated above, the proposal for production allotment 
was discussed and ultimately recommended by the Committee for USDA's 
consideration at the August 4, 2017 and August 31, 2017 meetings. The 
Committee is comprised of growers of cranberries operating within the 
production area and a public member, and all meetings are open to 
industry and public participation.
    Comment: The one comment taking a neutral position on the proposed 
action also indicated support for reestablishing the 2,500-barrel 
exemption for each grower, as recommended by the Committee, should USDA 
decide to go forward with the regulation.
    Response: For the reasons given above, the 2,500-barrel exemption 
for growers will not be reestablished.
    Comments: Additional comments were received that addressed issues 
outside the scope of the proposed rule.
    For the reasons discussed above, no changes will be made to the 
rule as proposed, based on the comments 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/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.
    After consideration of all relevant matter presented, including the 
information and recommendation of the Committee 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.

List of Subjects in 7 CFR Part 929

    Cranberries, Marketing agreements, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 929 is 
amended as follows:

PART 929--CRANBERRIES GROWN IN STATES OF MASSACHUSETTS, RHODE 
ISLAND, CONNECTICUT, NEW JERSEY, WISCONSIN, MICHIGAN, MINNESOTA, 
OREGON, WASHINGTON, AND LONG ISLAND IN THE STATE OF NEW YORK

0
1. The authority citation for part 929 continues to read as follows:

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

Subpart B--Administrative Requirements

0
2. In Sec.  929.104, revise paragraph (a) introductory text and remove 
and reserve paragraph (b).
    The revision reads as follows:


Sec.  929.104  Outlets for excess cranberries.

    (a) In accordance with Sec.  929.61, excess cranberries may be 
diverted only to the following noncommercial or noncompetitive outlets:
* * * * *

0
3. In Sec.  929.105, add paragraph (c) to read as follows:


Sec.  929.105  Reporting.

* * * * *
    (c) Beginning with crop year 2018-19, the due date for the grower 
report required under Sec.  929.62(a) is changed to March 1.

0
4. Add Sec.  929.159 to read as follows:


Sec.  929.159  Excess cranberries.

    (a) Beginning with crop year 2018-19, handlers holding excess 
cranberries shall submit to the Committee a written plan outlining 
procedures for the systematic disposal of such cranberries as specified 
in Sec.  929.59(b) by March 1.
    (b) Beginning with crop year 2018-19, all excess cranberries shall 
be diverted as specified in Sec.  929.59(c) prior to August 31.

0
6. Add Sec.  929.253 to read as follows:


Sec.  929.253  Marketable quantity and allotment percentage for the 
2018-19 crop year.

    (a) The marketable quantity for the 2018-19 crop year is set at 
7.275 million barrels and the allotment percentage is designated at 75 
percent.
    (b) Organically grown fruit shall be exempt from the volume 
regulation requirements of this section. Small handlers who processed 
less than 125,000 barrels during the 2017-18 fiscal year are exempt 
from the volume regulation requirements of this section. Any handler 
who did not have carryover inventory at the end of the 2017-18 fiscal 
year is also exempt from the volume regulation requirements of this 
section.
    (c) Handlers have the option to process up to 50 percent of the 
excess cranberries received over their growers' allotments into 
dehydrated cranberries or other processed products. Handlers utilizing 
this option shall divert an amount of 2018-19 processed products 
equivalent to the volume of excess cranberries processed as provided 
for in Sec.  929.107. The remaining volume of excess cranberries must 
be diverted as whole fruit.

    Dated: September 7, 2018.
Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2018-19825 Filed 9-11-18; 8:45 am]
 BILLING CODE 3410-02-P



                                                                                                                                                                                              46069

                                             Rules and Regulations                                                                                         Federal Register
                                                                                                                                                           Vol. 83, No. 177

                                                                                                                                                           Wednesday, September 12, 2018



                                             This section of the FEDERAL REGISTER                    regulations issued to carry out a                     obligation imposed in connection with
                                             contains regulatory documents having general            marketing order as defined in 7 CFR                   the order is not in accordance with law
                                             applicability and legal effect, most of which           900.2(j). This final rule is issued under             and request a modification of the order
                                             are keyed to and codified in the Code of                Marketing Agreement and Order No.                     or to be exempted therefrom. A handler
                                             Federal Regulations, which is published under           929, as amended (7 CFR part 929),                     is afforded the opportunity for a hearing
                                             50 titles pursuant to 44 U.S.C. 1510.
                                                                                                     regulating the handling of cranberries                on the petition. After the hearing, USDA
                                             The Code of Federal Regulations is sold by              grown in the States of Massachusetts,                 would rule on the petition. The Act
                                             the Superintendent of Documents.                        Rhode Island, Connecticut, New Jersey,                provides that the district court of the
                                                                                                     Wisconsin, Michigan, Minnesota,                       United States in any district in which
                                                                                                     Oregon, Washington, and Long Island in                the handler is an inhabitant, or has his
                                             DEPARTMENT OF AGRICULTURE                               the State of New York. Part 929 (referred             or her principal place of business, has
                                                                                                     to as the ‘‘Order’’) is effective under the           jurisdiction to review USDA’s ruling on
                                             Agricultural Marketing Service                          Agricultural Marketing Agreement Act                  the petition, provided an action is filed
                                                                                                     of 1937, as amended (7 U.S.C. 601–674),               not later than 20 days after the date of
                                             7 CFR Part 929                                          hereinafter referred to as the ‘‘Act.’’ The           the entry of the ruling.
                                             [Doc. No. AMS–SC–18–0012; SC18–929–2                    Cranberry Marketing Committee                            This final rule establishes a
                                             FR]                                                     (Committee) locally administers the                   marketable quantity and grower
                                                                                                     Order and is comprised of growers of                  allotment percentage for the 2018–19
                                             Cranberries Grown in States of                          cranberries operating within the                      crop year. This rule is the result of the
                                             Massachusetts, et al.; Establishment of                 production area, and a public member.                 Committee’s recommendations made
                                             2018–19 Seasonal Volume Regulation                         The Department of Agriculture                      during its August 4, and August 31,
                                                                                                     (USDA) is issuing this final rule in                  2017, meetings, and a February 18,
                                             AGENCY:  Agricultural Marketing Service,
                                                                                                     conformance with Executive Orders                     2018, email vote. This rule establishes a
                                             USDA.
                                                                                                     13563 and 13175. This action falls                    marketable quantity of 7.275 million
                                             ACTION: Final rule.                                     within a category of regulatory actions               barrels and a grower allotment
                                             SUMMARY:   This rule implements a                       that the Office of Management and                     percentage of 75 percent. This action
                                             recommendation to establish a grower                    Budget (OMB) exempted from Executive                  also allows handlers to process up to 50
                                             allotment percentage for the 2018–19                    Order 12866 review. Additionally,                     percent of the excess cranberries they
                                             crop year and allows for the diversion                  because this final rule does not meet the             receive above their growers’ allotment,
                                             of processed products from that year                    definition of a significant regulatory                provided they divert an equivalent
                                             under the marketing order for                           action, it does not trigger the                       amount of 2018–19 cranberry processed
                                             cranberries grown in the production                     requirements contained in Executive                   products. It also establishes an
                                             area (Order). This action also specifies                Order 13771. See OMB’s Memorandum                     exemption for organically grown
                                             handlers subject to the regulation,                     titled ‘‘Interim Guidance Implementing                cranberries, specifies handlers subject to
                                             revises the definition of outlets for                   Section 2 of the Executive Order of                   the regulation, revises the definition of
                                             excess fruit, revises dates by which                    January 30, 2017 titled ‘Reducing                     outlets for excess fruit, and revises dates
                                             certain actions are due, and establishes                Regulation and Controlling Regulatory                 by which certain actions are due.
                                             exemptions to the action.                               Costs’ ’’ (February 2, 2017).                            The Committee also recommended an
                                                                                                        This rule has been reviewed under                  exemption for organically grown
                                             DATES: Effective October 12, 2018.
                                                                                                     Executive Order 12988, Civil Justice                  cranberries, and an exemption of 2,500
                                             FOR FURTHER INFORMATION CONTACT:                        Reform. Order provisions provide that                 barrels for each grower. After much
                                             Doris Jamieson, Marketing Specialist, or                the Committee may recommend and                       consideration, USDA determined the
                                             Christian D. Nissen, Regional Director,                 implement, subject to USDA approval,                  recommended grower exemption of
                                             Southeast Marketing Field Office,                       volume control regulation which would                 2,500 barrels should be revised.
                                             Marketing Order and Agreement                           decrease the available supply of                      Consequently, this final rule does not
                                             Division, Specialty Crops Program,                      cranberries whenever the Secretary of                 include the exemption of 2,500 barrels
                                             AMS, USDA; Telephone: (863) 324–                        Agriculture (Secretary) finds that ‘‘such             for each grower and instead exempts
                                             3375, Fax: (863) 291–8614, or Email:                    regulation will tend to effectuate the                handlers that processed less than
                                             Doris.Jamieson@ams.usda.gov or                          declared policy of the Act.’’                         125,000 barrels during the 2017–18
                                             Christian.Nissen@ams.usda.gov.                          Accordingly, this rule establishes a                  fiscal year, or handlers that did not have
                                               Small businesses may request                          marketable quantity and grower                        carryover inventory at the end of the
                                             information on complying with this                      allotment percentage for cranberries                  2017–18 fiscal year. Accordingly,
                                             regulation by contacting Richard Lower,                 produced during the 2018–19 crop year,                growers delivering their fruit to exempt
                                             Marketing Order and Agreement                           beginning September 1, 2018, and                      handlers are not subject to the
                                             Division, Specialty Crops Program,                      ending August 31, 2019.                               allotment.
                                             AMS, USDA, 1400 Independence                               The Act provides that administrative                  In addition, in a February 18, 2018,
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                                             Avenue SW, STOP 0237, Washington,                       proceedings must be exhausted before                  vote by email, the Committee voted
                                             DC 20250–0237; Telephone: (202) 720–                    parties may file suit in court. Under                 unanimously to adjust reporting dates
                                             2491, Fax: (202) 720–8938, or Email:                    section 608c(15)(A) of the Act, any                   associated with the allotment
                                             Richard.Lower@ams.usda.gov.                             handler subject to an order may file                  regulation. These changes were
                                             SUPPLEMENTARY INFORMATION: This final                   with USDA a petition stating that the                 previously discussed and supported by
                                             rule, pursuant to 5 U.S.C. 553, amends                  order, any provision of the order, or any             the Committee at a meeting on April 22,


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                                             46070        Federal Register / Vol. 83, No. 177 / Wednesday, September 12, 2018 / Rules and Regulations

                                             2014, as part of the consideration of                   led to increasing levels of inventories.              associated with oversupply and to try to
                                             another volume regulation for which a                   Ending inventory levels increased from                stabilize grower returns, the Committee
                                             rule was not issued.                                    5.8 million barrels in 2012 to 9.7 million            discussed the need to establish volume
                                                The recommendations included in                      barrels in 2016.                                      regulation. The Committee considered
                                             this rule will adjust supply to more                       Demand for cranberries is inelastic,               several options, including establishing
                                             closely meet market demand, improve                     meaning changes in consumer price                     free and restricted percentages under a
                                             grower and handler returns, and help                    have a minimal effect on total sales.                 handler withholding for the 2017–18
                                             reduce inventory.                                       However, grower prices are very                       crop year, establishing a grower
                                                Sections 929.49 and 929.52 provide,                  sensitive to changes in supply.                       allotment for the 2018–19 season, or
                                             in part, authority to establish a                       Consequently, higher inventory levels                 recommending both regulations.
                                             marketable quantity and grower                          place downward pressure on grower                        Considering the levels of inventory
                                             allotment percentage. Section 929.14                    prices for cranberries and reduce grower              and low grower returns, the Committee
                                             defines marketable quantity as the                      returns. Data reviewed by the                         voted to recommend a handler
                                             volume of cranberries needed to meet                    Committee indicates that the price per                withholding, setting the free and
                                             market demand and provide for an                        barrel received by some growers has                   restricted percentages of 85 percent and
                                             adequate carryover into the next season.                fallen from $30 a barrel in 2011 to $10               15 percent, respectively, for the 2017–18
                                             The allotment percentage is derived by                  a barrel in 2016. With the cost of                    season. AMS agreed with the
                                             dividing the marketable quantity by the                 production estimated at approximately                 Committee’s analysis and
                                             total of all growers’ sales histories.                  $35 a barrel, for many growers returns                recommendation and published the rule
                                             Section 929.48 outlines procedures for                  have fallen below the cost of                         establishing these percentages in the
                                             computing a grower’s sales history.                     production.                                           Federal Register on April 4, 2018 (83 FR
                                                Section 929.49 also prescribes how                      The Committee met on August 4,                     14350). The Committee estimated that
                                             the grower allotment percentage is                      2017, and again on August 31, 2017, and               the 15 percent restriction would remove
                                             calculated and distributed to growers                   discussed the estimated levels of supply              approximately one million barrels from
                                             and handlers. Each grower’s allotment                   and demand and how market conditions                  inventory, helping to maintain
                                             volume is calculated by multiplying the                 were impacting the industry. The                      inventories at current levels. While the
                                             individual’s sales history by the                       Committee discussed the approximate                   Committee recognized a small
                                             allotment percentage. A grower’s                        levels of production for the 2017–18                  restriction would not immediately
                                             allotment is the total volume a handler                 season, forecasting production at                     balance supply with demand, even a
                                             may purchase from, or handle on behalf                  approximately 9.1 million barrels.                    small restriction would remove a
                                             of, that grower during a year of volume                 Carryover inventory was estimated at                  portion of the volume from the market
                                             regulation. Cranberries received by a                   approximately 9.9 million barrels and                 and help prevent an additional increase
                                             handler that exceed the sum of their                    foreign acquired cranberries were                     in inventory.
                                             growers’ allotments can be used to fill                 expected to provide an additional 2.1                    With the handler withholding
                                             unused allotment. Any remaining                         million barrels, for a total available                removing an estimated one million
                                             cranberries are defined as excess                       supply of approximately 21.1 million                  barrels from the market, the industry
                                             cranberries as defined in § 929.59,                     barrels for the year. After accounting for            would still have approximately 10
                                             which also outlines the procedures and                  shrinkage, the Committee agreed on an                 million barrels remaining in inventory.
                                             dates by which excess cranberries are to                adjusted supply of 20.4 million barrels               Given the static demand and anticipated
                                             be diverted. Section 929.61 prescribes                  for the 2017–18 crop year.                            market conditions for the 2018–19 fiscal
                                             outlets for excess cranberries, which are                  Using these numbers, with estimated                year, the Committee also recommended
                                             further defined in § 929.104.                           sales of 9.5 million barrels for 2017–18,             establishing a grower allotment
                                                In addition, § 929.50 provides                       the Committee calculated a potential                  percentage for the 2018–19 fiscal year.
                                             authority for the transfer of sales history             carryover for the 2018–19 season of 10.9                 The Committee discussed various
                                             and annual allotment. Section 929.51                    million barrels. This is an                           levels of restriction, being sensitive to
                                             requires the Committee to consider                      approximately one million barrel                      the impact volume control could have
                                             market conditions, including supply                     increase from the carryover inventory                 on small growers and handlers. Some
                                             and demand, prior to recommending an                    for the 2017–18 crop year. Based on                   small handlers are able to sell all their
                                             allotment percentage, and that any                      these numbers, carryover inventory for                production each year and do not
                                             recommendation be made by March 1.                      the 2018–19 crop year would be                        maintain an inventory. Several
                                             Section 929.58(a) provides the authority                approximately 115 percent of annual                   Committee members stated a large
                                             to exempt from any or all requirements                  sales.                                                restriction would place a hardship on
                                             the handling of cranberries in such                        In discussing market conditions, the               these small handlers. However, the
                                             minimum quantities as the Committee,                    Committee recognized that sales have                  Committee also recognized that volume
                                             with the approval of the Secretary, may                 been relatively flat. The Committee also              control measures could help increase
                                             prescribe. Section 929.58(b) provides, in               noted supply has been exceeding                       grower returns by helping to align
                                             part, the authority to exempt from any                  demand by about one million barrels a                 supply with demand.
                                             or all requirements the handling of                     year. Using crop and sales estimates                     In addition, establishing an allotment
                                             cranberries of such forms or types,                     similar to 2017–18, and the estimated                 regulation can help growers reduce
                                             including organic cranberries, as the                   carryover from the 2017–18 season of                  production costs. Growers could choose
                                             Committee, with the approval of the                     10.9 million barrels, the potential                   to take bogs out of production, or reduce
                                             Secretary, may prescribe.                               carryover supply at the end of the 2018–              inputs such as fertilizer and pesticides
                                                Domestic cranberry production has
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                                                                                                     19 crop year could increase by another                in order to reduce their production
                                             been increasing over the past few years,                one million barrels to 11.9 million if no             volume to match their allotment. These
                                             up from 8.0 million barrels in 2012 to                  action is taken to regulate supply.                   and other steps could help growers
                                             9.6 million barrels in 2016. During the                    In reviewing these numbers, the                    reduce their costs of production for the
                                             last few years, demand has remained                     Committee agreed the industry is faced                2018–19 crop.
                                             relatively flat, and has not kept pace                  with a large inventory that continues to                 Based on the information available,
                                             with the increases in supply. This has                  build. To address the problems                        the Committee recommended


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                                                          Federal Register / Vol. 83, No. 177 / Wednesday, September 12, 2018 / Rules and Regulations                                        46071

                                             establishing a marketable quantity of                   fresh berries is applied equitably among              providing the following information:
                                             7.275 million barrels and an allotment                  all handlers.                                         Total acreage harvested and whether
                                             percentage of 75 percent for the 2018–                     Using the conversion table, handlers               owned or leased; total commercial
                                             19 crop year. With volume regulation,                   can determine the amount of cranberry                 cranberry sales in barrels from such
                                             returns are expected to be higher than                  concentrate they need to divert, in lieu              acreage; the amount of acres either in
                                             without volume regulation. This                         of fresh berries, to cover the fresh                  production but not harvested, or taken
                                             increase is beneficial to all growers and               cranberry equivalent of any excess                    out of production, and the reason(s)
                                             handlers regardless of size, and                        cranberries processed. Juice concentrate              why; the amount of new or replanted
                                             enhances total revenues in comparison                   should comprise the vast majority of                  acreage coming into production; the
                                             to no volume regulation. Establishing an                processed product used for diversion.                 name of the handler(s) to whom
                                             allotment percentage allows the                         Should requests be made to use other                  commercial cranberry sales were made;
                                             industry to help stabilize supplies. This               processed products for diversion,                     and such other information as may be
                                             rule could remove a potential 2 million                 conversion rates for those products will              needed for implementation and
                                             barrels from supply, reduce industry                    be provided by the Committee based on                 operation of this section. Growers might
                                             inventory, and increase industry                        information provided by the requesting                not have all necessary information to
                                             returns. This rule adds a new § 929.253                 handler.                                              complete the report by the current
                                             to establish the marketable quantity and                   For example, a grower with a sales                 deadline. Therefore, the Committee
                                             grower allotment.                                       history of 1,000 barrels will have an                 recommended changing the grower
                                                The Committee also recommended                       allotment of 750 barrels (1,000 × .75). If            reporting date from January 15 to March
                                             that handlers have the option to receive                the grower delivered all 1,000 barrels to             1.
                                             cranberries over their grower allotment                 the handler, the handler will have 250                   The Committee also recommended
                                             and process up to 50 percent of the                     barrels of excess fruit. Under this final             organically grown cranberries be exempt
                                             excess cranberries received rather than                 rule, the handler could divert 250                    from this regulation as they serve a
                                             divert them in fresh form, as currently                 barrels of fresh fruit to approved outlets            niche market and represent a very small
                                             required. Handlers that do so need to                   or divert half (125 barrels of fresh fruit)           portion of the total crop. All other
                                             divert an amount of 2018–19 cranberry                   and process half, diverting a 125 barrel              cranberry production, including fresh
                                                                                                     equivalent in 2018–19 processed                       cranberries, are subject to regulation
                                             processed products equivalent to the
                                                                                                     product.                                              under the grower allotment volume
                                             volume of excess cranberries processed.
                                                                                                        The Committee also recommended                     regulation.
                                                The Committee made this                              changes to date requirements currently                   To address the burden the volume
                                             recommendation recognizing that                         specified in the Order. Section 929.59(b)             regulation would have on small growers
                                             processing fresh fruit to produce one of                currently states that ‘‘prior to January 1,           and handlers, the Committee also
                                             its top-selling items, sweetened dried                  or such other date as recommended by                  recommended providing an exemption
                                             cranberries (SDC), results in juice                     the committee and approved by the                     of 2,500 barrels for all growers. Under
                                             concentrate as a by-product. A                          Secretary, handlers holding excess                    the Committee’s recommendation, the
                                             significant amount of current inventory                 cranberries shall submit to the                       exemption would be applied following
                                             is in the form of juice concentrate. By                 committee a written plan outlining                    the calculation of a grower’s allotment.
                                             allowing handlers to process a portion                  procedures for the systematic disposal                However, after much consideration,
                                             of the excess cranberries they receive,                 of such cranberries in the outlets                    USDA determined the exemption
                                             more fresh cranberries are available to                 prescribed in § 929.61.’’ The Committee               recommendation should be revised.
                                             produce products requiring whole                        agreed the date for submitting disposal               Rather than provide an exemption of
                                             cranberries, such as SDC, and the                       plans should be extended in order to                  2,500 barrels for each grower, this action
                                             diversion of concentrate will help                      give handlers more time to consider                   exempts small handlers who processed
                                             prevent additional build-up of                          how to divert their excess cranberries.               less than 125,000 barrels from the
                                             inventory. Handlers still have the option               Therefore, the Committee recommended                  allotment requirement. Further,
                                             to divert fresh berries as excess supply.               changing the deadline prescribed in                   handlers who did not have carryover
                                                To allow for the diversion of                        § 929.59(b) from January 1 to March 1 of              inventory at the end of the 2017–18
                                             processed products, § 929.104(b), which                 the regulated season.                                 fiscal year are also exempt from the
                                             currently prohibits the handling of                        Section 929.59(c) states that ‘‘prior to           allotment requirement. Accordingly,
                                             excess fruit, is removed. To ensure the                 March 1, or such other date as                        growers delivering their fruit to exempt
                                             diversion of processed products in lieu                 recommended by the committee and                      handlers are not subject to the
                                             of fresh cranberries is correctly                       approved by the Secretary, all excess                 allotment.
                                             accounted for, the final rule for volume                cranberries shall be disposed of                         These changes allow handlers who
                                             regulation for the 2017–18 season (83                   pursuant to § 929.61.’’ Given the change              have matched their production with
                                             FR 14350) adds guidance under                           in the due date for the diversion plans,              market demand to continue to serve
                                             § 929.107 along with a conversion table.                the Committee agreed that this date                   their customer base and maintain their
                                             The table recognizes different                          should also be changed to provide                     market share. Small growers also have
                                             conversion equivalencies of cranberries                 handlers with enough time to comply                   the option of delivering their fruit to
                                             to processed product based on the                       with this requirement. Therefore, the                 handlers who are not subject to the
                                             volume of Brix concentrate.                             Committee recommended changing the                    regulation. Handlers subject to the
                                                Brix is the method for measuring the                 date by which diversion is to be                      allotment percentage should be able to
                                             amount of sugar contained in the                        completed from March 1 to August 31.                  meet any market shortfalls by utilizing
                                             cranberry products, and the industry
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                                                                                                     AMS agrees with the Committee’s                       cranberries or cranberry products
                                             average for concentrate is 50 Brix. The                 analysis and recommendation and is                    available in inventory. The provision
                                             Committee acknowledged that the Brix                    issuing this rule to add a new § 929.159              allowing handlers to process a portion
                                             level can vary depending on the                         to make these date changes.                           of their excess cranberries also helps
                                             growing region and farming practices.                      Section 929.62(a) requires each                    provide some flexibility.
                                             The table helps ensure that the                         grower to file a report with the                         With this action, only those handlers
                                             diversion of processed product in lieu of               Committee by January 15 of each year                  carrying inventory are subject to


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                                             46072        Federal Register / Vol. 83, No. 177 / Wednesday, September 12, 2018 / Rules and Regulations

                                             meeting the allotment requirement. In                   regulation, revises the definition of                    While cranberry production has
                                             reviewing the Committee’s                               outlets for excess fruit, and revises dates           continued to rise, demand has failed to
                                             recommendation and other available                      by which certain actions are due.                     keep pace, and inventories have been
                                             industry information, USDA has                                                                                increasing. In an industry such as
                                                                                                     Final Regulatory Flexibility Analysis
                                             determined that existing inventories in                                                                       cranberries, product can be stored in
                                             excess of 9 million barrels are putting                    Pursuant to requirements set forth in              inventory for long periods of time. Large
                                             the most downward pressure on returns                   the Regulatory Flexibility Act (RFA) (5               inventories are costly to maintain,
                                             to both growers and handlers.                           U.S.C. 601–612), the Agricultural                     difficult to market, and have a price-
                                             Consequently, this rule puts more focus                 Marketing Service (AMS) has                           depressing effect. When supply
                                             on reducing the volume in inventory.                    considered the economic impact of this                outpaces demand and results in high
                                                Section 929.125 provides authority for               action on small entities. Accordingly,                levels of inventories, grower and
                                             a grower to request a review by an                      AMS has prepared this final regulatory                handler returns can be negatively
                                             appeals subcommittee if the grower is                   flexibility analysis.                                 impacted.
                                             dissatisfied with his or her sales history                 The purpose of the RFA is to fit                      Demand for cranberries is inelastic,
                                             calculation provided by the Committee.                  regulatory actions to the scale of                    meaning changes in price have a
                                             The grower must request the review                      businesses subject to such actions in                 minimal effect on total sales volume.
                                             within 30 days after receipt of the                     order that small businesses will not be               However, grower prices are very
                                             Committee’s determination of sales                      unduly or disproportionately burdened.                sensitive to changes in supply. A grower
                                             history and must submit documentation                   Marketing orders issued pursuant to the               allotment program results in a decrease
                                             showing why he or she believes the                      Act, and rules issued thereunder, are                 in supply as handlers can only purchase
                                             calculation is inaccurate. Within 15                    unique in that they are brought about                 a portion of a grower’s production,
                                             days after notification of the appeals                  through group action of essentially                   which is based on the grower’s past
                                             subcommittee’s decision, if the grower                  small entities acting on their own                    sales history. Even a small shift in
                                             is not satisfied with the decision, the                 behalf.                                               supply can have a positive effect on
                                             grower may further appeal to the                           There are approximately 1,100                      grower prices. Therefore, using a grower
                                             Secretary.                                              cranberry growers in the regulated area               allotment program to reduce supply
                                                A grower may transfer all or part of
                                                                                                     and approximately 65 cranberry                        should increase grower prices and
                                             their allotment to another grower,
                                                                                                     handlers subject to regulation under the              revenues.
                                             provided that the transferred allotment
                                                                                                     Order. Small agricultural growers are                    This final rule establishes a grower
                                             remains assigned to the same handler.
                                                                                                     defined by the Small Business                         allotment of 75 percent for the 2018–19
                                             Transfers of allotment between growers
                                                                                                     Administration (SBA) as those having                  crop year. It also allows handlers to
                                             having different handlers may occur
                                                                                                     annual receipts of less than $750,000,                process up to 50 percent of the excess
                                             with the consent of both handlers. All
                                                                                                     and small agricultural service firms are              cranberries they receive above their
                                             such transfers have to be reported to the
                                             Committee. After all allotment transfers                defined as those whose annual receipts                growers’ allotment, provided they divert
                                             have occurred, any unused allotment                     are less than $7,500,000 (13 CFR                      an equivalent amount of 2018–19
                                             would be transferred to the Committee.                  121.201).                                             cranberry processed products. In
                                             The Committee would then redistribute                      According to industry and Committee                addition, this rule exempts organically
                                             any unused allotment to handlers                        data, the average grower price for                    grown cranberries, specifies handlers
                                             having excess cranberries in an amount                  cranberries during the 2016–17 season                 subject to the regulation, revises the
                                             proportionate to each handler’s total                   was $23.50 per barrel and total sales                 definition of outlets for excess fruit, and
                                             allotment. These provisions help ensure                 were approximately 9.5 million barrels.               revises dates by which certain actions
                                             that excess supply is utilized, to the                  The value for cranberries that year                   are due. These actions are designed to
                                             extent possible, through unfilled                       totaled $223,250,000 ($23.50 per barrel               help stabilize marketing conditions,
                                             allotment.                                              multiplied by 9.5 million barrels).                   reduce burdensome inventories, and
                                                The Committee considered the                         Taking the total value of production for              improve grower and handler returns.
                                             estimated level of production and                       cranberries and dividing it by the total              This rule revises §§ 929.104 and 929.105
                                             anticipated demand, and determined                      number of cranberry growers provides                  and establishes new §§ 929.159 and
                                             that without some action on the part of                 an average return per grower of                       929.253. The authority for these actions
                                             the Committee, inventory levels will                    $202,955. Using the average price and                 is provided for in §§ 929.48, 929.49,
                                             continue to increase throughout the                     utilization information, and assuming a               929.51, 929.52, 929.58, 929.59, 929.61,
                                             2018–19 season. The Committee                           normal distribution, the majority of                  and 929.62. These changes are based on
                                             believes using the volume control                       cranberry growers receive less than                   Committee recommendations from
                                             authorities in the Order will help                      $750,000 annually.                                    meetings on August 4 and August 31,
                                             stabilize marketing conditions for                         According to USDA’s Market News                    2017, and a February 18, 2018, email
                                             cranberries by helping to adjust supply                 report, the average free on board (f.o.b.)            vote.
                                             to meet market demand and improve                       price for cranberries was approximately                  While these actions could result in
                                             grower returns.                                         $30.00 per barrel. Multiplying the f.o.b.             some additional costs to the industry,
                                                Accordingly, this final rule                         price by total utilization of 9.5 million             the benefits are expected to outweigh
                                             establishes a grower allotment at 75                    barrels results in an estimated handler-              them. The purpose of establishing an
                                             percent for the 2018–19 season. It also                 level cranberry value of $285 million.                allotment percentage is to address
                                             gives handlers the option to process up                 Dividing this figure by the number of                 oversupply conditions and to stabilize
                                             to 50 percent of the excess cranberries                 handlers (65) yields an estimated                     grower prices. The industry has a
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                                             they receive above their growers’                       average annual handler receipt of $4.3                significant volume in inventory, and
                                             allotment, provided they divert an                      million, which is below the SBA                       this has had a negative impact on
                                             equivalent amount of 2018–19 cranberry                  threshold for small agricultural service              grower and handler returns. Without
                                             processed products. This final rule also                firms. Therefore, the majority of growers             volume control, inventories will likely
                                             exempts organically grown cranberries,                  and handlers of cranberries may be                    continue to increase, further lowering
                                             specifies handlers subject to the                       classified as small entities.                         returns.


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                                                          Federal Register / Vol. 83, No. 177 / Wednesday, September 12, 2018 / Rules and Regulations                                        46073

                                                Inventories have significantly                       This will reduce the burden the volume                become necessary, they would be
                                             increased since 2011. In 2011, existing                 restriction has on small handlers and                 submitted to OMB for approval.
                                             inventories were around 4.6 million                     their growers.                                           This final rule will not impose any
                                             barrels. By the end of the 2016–17                         In addition, handlers who did not                  additional reporting or recordkeeping
                                             season, inventories were approximately                  have carryover inventory at the end of                requirements on either small or large
                                             9.9 million barrels, and by the end of                  the 2017–18 fiscal year are also exempt               cranberry growers or handlers. As with
                                             the 2017–18 season, inventories are                     from the allotment percentage. This                   all Federal marketing order programs,
                                             projected to be approximately 10.9                      allows handlers that have matched their               reports and forms are periodically
                                             million barrels. Inventories as a                       production with market demand to                      reviewed to reduce information
                                             percentage of total sales have also been                continue to serve their customer base                 requirements and duplication by
                                             increasing from approximately 50                        and maintain their market share.                      industry and public sector agencies.
                                             percent in 2010 to approximately 103                    Handlers subject to the restriction                      As noted in the initial regulatory
                                             percent in 2016, and could reach an                     should be able to meet any shortfalls by              flexibility analysis, USDA has not
                                             anticipated 115 percent after the 2017–                 utilizing cranberries or cranberry                    identified any relevant Federal rules
                                             18 season. These inventories have had                   products they have in inventory.                      that duplicate, overlap, or conflict with
                                             a depressing effect on grower prices,                      Further, making the recommendation                 this final rule.
                                             which for many growers have fallen                      to regulate the volume handled under a                   AMS is committed to complying with
                                             below their cost of production.                         grower allotment program could result                 the E-Government Act to promote the
                                                Retail demand for cranberries is                     in some cost savings for growers                      use of the internet and other
                                             highly inelastic, which indicates                       depending upon what actions they may                  information technologies to provide
                                             changes in consumer prices do not                       take to adjust supply.                                increased opportunities for citizen
                                             result in significant changes in the                       As the allotment represents a                      access to Government information and
                                             quantity demanded. Consumer prices                      percentage of the grower’s sales history,             services, and for other purposes.
                                             are also not significantly impacted by                  the costs, when applicable, are                          In addition, the Committee’s meetings
                                             minor changes in cranberry supplies.                    proportionate and should not place an                 were widely publicized throughout the
                                             Therefore, this action should have little               extra burden on small entities as                     cranberry industry and all interested
                                             or no effect on consumer prices and                     compared to large entities. Likewise,                 persons were invited to attend the
                                             should not result in a reduction in retail              growers and handlers, regardless of size,             meetings and participate in Committee
                                             sales. However, even a small shift in                   benefit from the stabilizing effects of               deliberations on all issues. Like all
                                             supply could increase grower and                        this action.                                          Committee meetings, the August 4, 2017
                                             handler returns. The use of allotment                      One alternative considered by the                  and August 31, 2017 meetings were
                                             percentages will likely have a positive                 Committee was not to impose a volume                  public meetings and all entities, both
                                             impact on grower and handler returns                    regulation during the 2018–19 crop                    large and small, were able to express
                                             for this crop year.                                     year. However, Committee members                      views on these issues.
                                                This rule will result in some fruit                  believed that inventory levels were such                 A proposed rule concerning this
                                             being taken off the market. However, a                  that some form of volume control was                  action was published in the Federal
                                             sufficient amount of fruit will still be                necessary to help stabilize marketing                 Register on April 27, 2018 (83 FR
                                             available to supply all aspects of the                  conditions.                                           18462). Copies of the proposed rule
                                             market. In addition, allowing handlers                     The Committee also considered other                were sent via email to Committee
                                             the option to process up to 50 percent                  allotment percentage levels. However,                 members and cranberry handlers.
                                             of the excess cranberries they receive                  some members were concerned that                      Additionally, the rule was made
                                             above their growers’ allotment, provided                setting an allotment percentage that was              available through the internet by USDA
                                             they divert an equivalent amount of                     too restrictive could negatively impact               and the Office of the Federal Register. A
                                             2018–19 cranberry processed products,                   small growers. The Committee also                     30-day comment period ending May 29,
                                             provides handlers some additional                       considered not recommending a                         2018, was provided to allow interested
                                             flexibility and may help reduce                         provision to allow a percentage of                    persons to respond to the proposal.
                                             inventories of juice concentrate, one of                excess cranberries to be processed into                  During the comment period, 24
                                             the largest segments of existing                        cranberry products. The Committee                     comments were received in response to
                                             inventory.                                              determined that allowing handlers to                  the proposal. Of the comments received,
                                                There are also secondary outlets                     process up to 50 percent of the excess                12 were in support of the regulation, but
                                             available for excess fruit, including                   cranberries they receive above their                  also requested some changes to the
                                             foreign markets except Canada,                          growers’ allotment would provide                      proposal, 11 were opposed to the
                                             charitable institutions, nonhuman food                  additional volumes of fresh cranberries               regulation, and 1 took no position.
                                             use, and research and development                       for processing and would provide                         Comments: In the comments that
                                             projects. While these alternatives may                  handlers some flexibility while not                   supported volume regulation, but with
                                             provide different levels of return than                 adding additional juice concentrate to                changes from what was included in the
                                             sales to primary markets, they play an                  the existing inventory levels. Therefore,             proposed rule, the 12 commenters stated
                                             important role for the industry. In                     for the reasons mentioned above, these                the volume regulation was a way to
                                             addition, if demand is greater than                     alternatives were rejected by the                     reduce supply and benefit the industry.
                                             anticipated, there are significant                      Committee.                                            These 12 comments also specifically
                                             amounts of fruit in inventory that can be                  In accordance with the Paperwork                   supported the handler’s flexibility to
                                             utilized to meet demand.                                Reduction Act of 1995 (44 U.S.C.                      divert excess fruit, stating it would help
                                                This action also exempts small                       Chapter 35), the Order’s information
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                                                                                                                                                           handlers maximize the value of the
                                             handlers who processed less than                        collection requirements have been                     fruit.
                                             125,000 barrels in 2017–18 from the                     previously approved by OMB and                           The 12 comments also suggested
                                             allotment percentage. Consequently,                     assigned OMB No. 0581–0189, Fruit                     handlers be allowed to divert 100
                                             small handlers whose acquired volume                    Crops. No changes in those                            percent of their excess fruit in processed
                                             is 125,000 barrels or less are exempt                   requirements as a result of this action               form, rather than the 50 percent allowed
                                             from the allotment volume restriction.                  are necessary. Should any changes                     under the proposed rule. They stated


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                                             46074        Federal Register / Vol. 83, No. 177 / Wednesday, September 12, 2018 / Rules and Regulations

                                             that with a significant amount of the                   those handlers carrying inventory will                regardless of size. A grower’s allotment
                                             current inventory in the form of juice                  be subject to meeting the allotment                   is the total volume a handler may
                                             concentrate, this would help prevent                    requirement.                                          purchase from, or handle on behalf of,
                                             additional build-up of inventory.                          Handlers subject to the allotment                  that grower during a year of volume
                                                Response: While a significant portion                percentage should be able to meet any                 regulation. Each grower’s allotment
                                             of existing inventory is concentrate, not               market shortfalls by utilizing cranberries            volume is calculated by multiplying the
                                             all handlers produce concentrate or                     or cranberry products available in                    individual’s sales history by the
                                             concentrate as a byproduct of SDC                       inventory. The provision allowing                     allotment percentage. As the allotment
                                             production. Allowing the use of 50                      handlers to process a portion of their                percentage is applied to each grower’s
                                             percent of 2018–19 cranberry products                   excess cranberries also helps provide                 sales history, the costs, when
                                             to meet the excess fruit restriction                    some flexibility.                                     applicable, are proportionate and
                                             recognizes the need to reduce cranberry                    Comment: Another comment stated                    should not place an extra burden on
                                             concentrate inventory, while also                       they did not support using 2017                       small entities as compared to large
                                             addressing the overall oversupply facing                deliveries to determine the 2018                      entities.
                                             the industry.                                           exemptions, and that the no carryover                    Further, the benefits are expected to
                                                Comments: Eleven of these                            inventory exemption is flawed.                        outweigh any additional costs and
                                             commenters also expressed that the                         Response: Regarding using 2017–18                  positively impact all growers and
                                             exemption for small handlers does not                   information to determine 2018–19                      handlers, regardless of size. The
                                             help small growers. These commenters                    exemptions, this is a grower’s                        industry has a significant volume in
                                             asked USDA to reconsider its decision                   production allotment volume                           inventory, and this has had a negative
                                             to do away with the 2,500 barrel                        regulation. As such, it is important for              impact on all grower and handler
                                             exemption for each grower as                            growers to have an idea of what their                 returns. If steps are not taken to reduce
                                             recommended by the Committee.                           allotment will be for the upcoming                    the level of inventory, these downward
                                                Response: In reviewing the                           season. Growers can then use that                     pressures will persist. The purpose of
                                             Committee’s recommendation and other                    information to make determinations                    establishing the allotment percentage is
                                             available industry information, USDA                    regarding their production. By using the              to address the oversupply conditions
                                             has determined that existing inventories                information from 2017–18, USDA                        which are negatively impacting industry
                                             in excess of 9 million barrels are putting              provided growers with exemptions they                 returns. Generally, reducing supply
                                             the most downward pressure on returns                   could use to determine whether their                  levels results in prices increasing for
                                             to both growers and handlers.                           production would be subject to the                    growers and handlers. Therefore,
                                             Consequently, this rule puts more focus                 allotment, or the potential opportunity               lowering inventory levels is expected to
                                             on reducing the volume in inventory,                    to choose to deliver their production to              result in positive returns for the entire
                                             which should benefit both small                         an exempt handler.                                    industry.
                                             growers and small handlers.                                Comments: Of the 11 comments in                       Comments: Four comments stated the
                                                Rather than provide an exemption of                  opposition of the proposed rule, five                 shortage in the 2017 crop makes the
                                             2,500 barrels for each grower, an action                support the reinstatement of the 2,500                grower allotment unnecessary and
                                             which would have exempted nearly                        barrel exemption for each grower as                   harmful, and the rule will create an
                                             2.75 million barrels, this action exempts               discussed above. Four stated the                      artificial spike in market price for
                                             small handlers who processed less than                  proposed change would do little or                    finished goods. Another commenter
                                             125,000 barrels during the 2017–18                      nothing to accomplish USDA’s stated                   questioned regulating cranberries when
                                             fiscal year from the allotment                          goal of controlling the overage of                    Canadian production is not subject to
                                             requirement. Small handlers processing                  cranberry concentrate.                                the allotment.
                                             less than 125,000 barrels make up                          Response: Concentrate represents a                    Response: In reviewing the
                                             nearly 88 percent of all handlers, yet                  large portion of existing inventory.                  Committee’s recommendation and other
                                             combined, account for less than 10                      However, at the end of the 2016–17                    available industry information, USDA
                                             percent of the total volume of                          fiscal year, of the estimated 9.7 million             has determined that existing inventory
                                             cranberries processed. Based on                         barrels in inventory, approximately 4.2               is putting the most downward pressure
                                             Committee data, these small handlers                    million barrels were frozen berries,                  on returns to both growers and handlers.
                                             were holding little or no volume in                     while approximately 3.7 million barrels               Even with the shortfall in the 2017 crop
                                             inventory at the end of the 2016–17                     were concentrate. The rule provides for               and the handler withhold established
                                             season. USDA’s revisions to the                         the diversion of processed product to                 for the 2017–18 season, the industry
                                             Committee’s proposal therefore exempts                  meet 50 percent of the restriction as a               will enter the 2018–19 season with
                                             these handlers from the allotment                       way to reduce the inventory of                        inventory levels that will continue to
                                             requirement. Although focused on                        concentrate. However, reducing overall                negatively affect industry returns. In
                                             handlers, this change is expected to                    supply, including whole fruit, is also                addition, existing inventory, combined
                                             have a positive impact on grower                        important in addressing the current                   with an additional 9 million barrels of
                                             returns by reducing overall supply in                   level of inventory.                                   anticipated 2017 domestic production,
                                             the market. Additionally, small growers                    Comments: Six comments stated that                 will provide a more than ample
                                             would have the option of delivering                     the proposed regulation would                         domestic supply to meet sales
                                             their fruit to handlers who are not                     negatively impact independent growers                 requirements. Consequently, this
                                             subject to the regulation.                              and another stated that this would hurt               regulation should have little effect on
                                                In addition, handlers who did not                    small growers. Four commenters stated                 consumer prices. Moreover, while the
                                             have carryover inventory at the end of
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                                                                                                     this regulation would adversely affect                Order does not regulate the volume of
                                             the 2017–18 fiscal year are also exempt.                midsize handlers.                                     imports, given the current levels of
                                             USDA believes that this will allow                         Response: While these actions could                available domestic supply, this rule is
                                             handlers who have matched their                         result in some additional costs to the                not expected to lead to an increase in
                                             production with market demand to                        industry, the allotment percentage                    imported product.
                                             continue to serve their customer base                   established by this rule applies                         Comment: One comment in
                                             and maintain their market share. Only                   uniformly to all those regulated,                     opposition to the proposal stated it


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                                                          Federal Register / Vol. 83, No. 177 / Wednesday, September 12, 2018 / Rules and Regulations                                              46075

                                             would be implemented too late, as                       List of Subjects in 7 CFR Part 929                    125,000 barrels during the 2017–18
                                             growers have already made their                           Cranberries, Marketing agreements,                  fiscal year are exempt from the volume
                                             production decisions. It further stated                 Reporting and recordkeeping                           regulation requirements of this section.
                                             the rule should be implemented next                     requirements.                                         Any handler who did not have
                                             season when they have more time to                                                                            carryover inventory at the end of the
                                                                                                       For the reasons set forth in the                    2017–18 fiscal year is also exempt from
                                             make economic decisions relating to
                                                                                                     preamble, 7 CFR part 929 is amended as                the volume regulation requirements of
                                             their crop.
                                                                                                     follows:                                              this section.
                                                Response: Utilizing a production
                                             allotment allows growers to make                        PART 929—CRANBERRIES GROWN IN                            (c) Handlers have the option to
                                             adjustments to reduce their costs. Given                STATES OF MASSACHUSETTS,                              process up to 50 percent of the excess
                                             the oversupply, it is important to take                 RHODE ISLAND, CONNECTICUT, NEW                        cranberries received over their growers’
                                                                                                     JERSEY, WISCONSIN, MICHIGAN,                          allotments into dehydrated cranberries
                                             action on this issue. Further, growers
                                                                                                     MINNESOTA, OREGON,                                    or other processed products. Handlers
                                             have been aware of this
                                                                                                     WASHINGTON, AND LONG ISLAND IN                        utilizing this option shall divert an
                                             recommendation for some time, and the
                                                                                                     THE STATE OF NEW YORK                                 amount of 2018–19 processed products
                                             proposed rule on this action published
                                                                                                                                                           equivalent to the volume of excess
                                             on April 27, 2018.
                                                                                                     ■ 1. The authority citation for part 929              cranberries processed as provided for in
                                                Comment: Another commenter stated                    continues to read as follows:                         § 929.107. The remaining volume of
                                             the proposed regulation originated from                                                                       excess cranberries must be diverted as
                                             the major cooperative.                                      Authority: 7 U.S.C. 601–674.
                                                                                                                                                           whole fruit.
                                                Response: As stated above, the                       Subpart B—Administrative                                Dated: September 7, 2018.
                                             proposal for production allotment was                   Requirements                                          Bruce Summers,
                                             discussed and ultimately recommended                                                                          Administrator, Agricultural Marketing
                                             by the Committee for USDA’s                             ■ 2. In § 929.104, revise paragraph (a)               Service.
                                             consideration at the August 4, 2017 and                 introductory text and remove and                      [FR Doc. 2018–19825 Filed 9–11–18; 8:45 am]
                                             August 31, 2017 meetings. The                           reserve paragraph (b).
                                                                                                                                                           BILLING CODE 3410–02–P
                                             Committee is comprised of growers of                      The revision reads as follows:
                                             cranberries operating within the
                                                                                                     § 929.104    Outlets for excess cranberries.
                                             production area and a public member,
                                                                                                       (a) In accordance with § 929.61,                    BUREAU OF CONSUMER FINANCIAL
                                             and all meetings are open to industry
                                                                                                     excess cranberries may be diverted only               PROTECTION
                                             and public participation.
                                                                                                     to the following noncommercial or
                                                Comment: The one comment taking a                    noncompetitive outlets:                               12 CFR Part 1070
                                             neutral position on the proposed action                                                                       [Docket No. CFPB–2016–0039]
                                                                                                     *     *     *     *    *
                                             also indicated support for reestablishing
                                                                                                     ■ 3. In § 929.105, add paragraph (c) to               RIN 3170–AA63
                                             the 2,500-barrel exemption for each
                                                                                                     read as follows:
                                             grower, as recommended by the
                                             Committee, should USDA decide to go                                                                           Disclosure of Records and Information
                                                                                                     § 929.105    Reporting.
                                             forward with the regulation.                            *     *    *     *     *                              AGENCY:  Bureau of Consumer Financial
                                                Response: For the reasons given                        (c) Beginning with crop year 2018–19,               Protection.
                                             above, the 2,500-barrel exemption for                   the due date for the grower report                    ACTION: Final rule.
                                             growers will not be reestablished.                      required under § 929.62(a) is changed to
                                                                                                     March 1.                                              SUMMARY:  This final rule amends the
                                                Comments: Additional comments                                                                              procedures used by the public to obtain
                                                                                                     ■ 4. Add § 929.159 to read as follows:
                                             were received that addressed issues                                                                           information from the Bureau of
                                             outside the scope of the proposed rule.                 § 929.159    Excess cranberries.                      Consumer Financial Protection (Bureau)
                                                For the reasons discussed above, no                     (a) Beginning with crop year 2018–19,              under the Freedom of Information Act,
                                             changes will be made to the rule as                     handlers holding excess cranberries                   the Privacy Act of 1974, and in legal
                                             proposed, based on the comments                         shall submit to the Committee a written               proceedings.
                                             received.                                               plan outlining procedures for the                     DATES:This final rule is effective
                                                A small business guide on complying                  systematic disposal of such cranberries               October 12, 2018.
                                             with fruit, vegetable, and specialty crop               as specified in § 929.59(b) by March 1.
                                                                                                                                                           FOR FURTHER INFORMATION CONTACT:
                                             marketing agreements and orders may                        (b) Beginning with crop year 2018–19,
                                                                                                                                                           David Snyder, Senior Counsel, Legal
                                             be viewed at: http://www.ams.usda.gov/                  all excess cranberries shall be diverted
                                                                                                                                                           Division, at 202–435–7758. If you
                                             rules-regulations/moa/small-businesses.                 as specified in § 929.59(c) prior to
                                                                                                                                                           require this document in an alternative
                                             Any questions about the compliance                      August 31.
                                                                                                                                                           electronic format, please contact CFPB_
                                             guide should be sent to Richard Lower                   ■ 6. Add § 929.253 to read as follows:
                                                                                                                                                           Accessibility@cfpb.gov.
                                             at the previously mentioned address in                  § 929.253 Marketable quantity and                     SUPPLEMENTARY INFORMATION:
                                             the FOR FURTHER INFORMATION CONTACT                     allotment percentage for the 2018–19 crop
                                             section.                                                year.                                                 I. Background
                                                After consideration of all relevant                    (a) The marketable quantity for the                   The Bureau first published the
                                             matter presented, including the                         2018–19 crop year is set at 7.275 million             procedures used by the public to obtain
daltland on DSKBBV9HB2PROD with RULES




                                             information and recommendation of the                   barrels and the allotment percentage is               information from it under the Freedom
                                             Committee and other available                           designated at 75 percent.                             of Information Act, the Privacy Act of
                                             information, it is hereby found that this                 (b) Organically grown fruit shall be                1974, and in legal proceedings in an
                                             rule, as hereinafter set forth, will tend               exempt from the volume regulation                     interim final rule on July 28, 2011, 76
                                             to effectuate the declared policy of the                requirements of this section. Small                   FR 45371 (Jul. 28, 2011). This was
                                             Act.                                                    handlers who processed less than                      followed by a final rule on February 15,


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Document Created: 2018-09-12 02:06:23
Document Modified: 2018-09-12 02:06:23
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionFinal rule.
DatesEffective October 12, 2018.
ContactDoris Jamieson, 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: [email protected] or [email protected]
FR Citation83 FR 46069 
CFR AssociatedCranberries; Marketing Agreements and Reporting and Recordkeeping Requirements

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