[Federal Register Volume 59, Number 172 (Wednesday, September 7, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-21880]


[[Page Unknown]]

[Federal Register: September 7, 1994]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[FV94-981-3PR]

 

Almonds Grown in California; Proposed Salable, Reserve, and 
Export Percentages for the 1994-95 Crop Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule with request for comments.

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SUMMARY: This proposed rule invites comments on the establishment of 
salable, reserve, and export percentages for California almonds 
received by handlers during the 1994-95 almond crop year, which 
commenced on July 1, 1994. Based on the recommendation of the Almond 
Board of California (Board), the agency which locally administers the 
almond marketing order, and other available information, it is proposed 
to establish salable, reserve, and export percentages of 90 percent, 10 
percent, and 0 percent, respectively. This proposed rule is authorized 
under the marketing order for almonds grown in California and is 
intended to promote orderly marketing conditions and avoid unreasonable 
fluctuations in supplies and prices.

DATES: Comments must by received by September 22, 1994.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments must be sent in triplicate to the 
Docket Clerk, Fruit and Vegetable Division, AMS, USDA, P.O. Box 96456, 
Room 2523-S, Washington, D.C. 20090-6456, FAX (202) 720-5698. Comments 
should reference the docket number and the date and page number of this 
issue of the Federal Register and will be available for public 
inspection in the Office of the Docket Clerk during regular business 
hours.

FOR FURTHER INFORMATION CONTACT: Kathleen M. Finn, Marketing 
Specialist, Marketing Order Administration Branch, Fruit and Vegetable 
Division, AMS, USDA, Room 2536-S, P.O. Box 96456, Washington, D.C. 
20090-6456; telephone: (202) 720-1509, or FAX (202) 720-5698; or Martin 
Engeler, Assistant Officer-in-Charge, California Marketing Field 
Office, Fruit and Vegetable Division, AMS, USDA, 2202 Monterey Street, 
Suite 102-B, Fresno, CA 93721; telephone: (209) 487-5901, or FAX (209) 
487-5906.

SUPPLEMENTARY INFORMATION: This proposed rule is issued under Marketing 
Agreement and Order No. 981 [7 CFR Part 981], both as amended, 
hereinafter referred to as the ``order'', regulating the handling of 
almonds grown in California. The order is effective under the 
Agricultural Marketing Agreement Act of 1937, as amended [7 U.S.C. 601-
674], hereinafter referred to as the ``Act.''
    The Department of Agriculture (Department) is issuing this proposed 
rule in accordance with Executive Order 12866.
    This proposed rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. This proposal is not intended to have retroactive 
effect. The proposed rule will not preempt any State or local laws, 
regulations, or policies, unless they present an irreconcilable 
conflict with this rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with the Secretary a 
petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with law and request a modification of the order or to be exempt 
therefrom. A handler is afforded the opportunity for a hearing on the 
petition. After a hearing the Secretary will rule on the petition. The 
Act provides that the district court of the United States in any 
district in which the handler is an inhabitant, or has his or her 
principal place of business, has jurisdiction in equity to review the 
Secretary's ruling on the petition, provided a bill in equity is filed 
not later than 20 days after date of entry of the ruling.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Administrator of the Agricultural Marketing Service 
(AMS) has considered the economic impact of this action on small 
entities.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 115 handlers of almonds who are subject to 
regulation under the marketing order and approximately 7,000 producers 
in the regulated area. Small agricultural service firms are defined as 
those whose annual receipts are less than $5,000,000, and small 
agricultural producers have been defined by the Small Business 
Administration [13 CFR 121.601] as those having annual receipts of less 
than $500,000. The majority of handlers and producers of California 
almonds may be classified as small entities.
    The National Agricultural Statistics Service estimates 1994 
California almond production at 640 million kernelweight pounds, 31 
percent larger than last year. If realized, this could be one of the 
largest crops on record.
    In order to lessen the impact of this projected large almond supply 
facing the industry, the Board, at its July 7, 1994, meeting in 
Modesto, California, recommended establishing salable, reserve, and 
export percentages for the 1994-95 crop year by a vote of seven to 
three. This proposal would require handlers of California almonds to 
withhold, as a reserve, from normal domestic and export markets, 10 
percent of the merchantable almonds they receive from growers during 
the 1994-95 crop year. The remaining 90 percent (the salable 
percentage) of the crop could be sold by handlers in any market at any 
time. The last year salable and reserve percentages were established 
was the 1991-92 crop year.
    Almond production, like that of many agricultural commodities, can 
vary significantly from season-to-season due to a variety of factors. 
This in turn can cause wide fluctuations in prices. For example, the 
Board has estimated grower prices increased from $1.26 per pound for 
1992 crop almonds to nearly $2.00 per pound for 1993 crop almonds, when 
the corresponding estimated shipments for those crop years were 535.9 
million pounds and 497.7 million pounds, respectively. The large 1994 
California almond crop estimate has caused early speculation of grower 
prices in the $1.15 per pound range. Such swings in supplies and price 
levels can result in market instability and uncertainty for growers, 
handlers, buyers, and consumers.
    The long term goal of the almond industry is to increase almond 
consumption and demand, and the Board believes this can be best 
achieved in the presence of stable and orderly market conditions. The 
Board believes that the use of the reserve provisions of the marketing 
order as a supply management tool, in conjunction with other marketing 
tools available in the order, can assist in accomplishing the 
industry's goals.
    While this rule could restrict the amount of almonds which handlers 
could sell in normal domestic and export markets in the short term, the 
proposed salable and reserve percentages are intended to promote 
orderly marketing conditions by avoiding unreasonable fluctuations in 
supplies and prices and improving grower returns. Further, this 
proposed rule could help provide market stability during the 1995-96 
crop year by reserving almonds for shipment during that season in the 
event 1995 production is below trade demand needs.
    Authority to establish salable and reserve percentages is provided 
in Sec. 981.47 of the order. Section 981.66 authorizes disposition of 
reserve almonds to certain outlets, including export. Pursuant to 
Secs. 981.47 and 981.49 of the order, the Board based its 
recommendation for salable, reserve, and export percentages of 90 
percent, 10 percent, and 0 percent, respectively, on estimates of 
marketable supply and combined domestic and export trade demand for the 
1994-95 crop year. The Board's 1994 marketable production estimate of 
620.8 million kernelweight pounds is based on a 1994 crop estimate 
issued by the National Agricultural Statistics Service of 640 million 
kernelweight pounds, minus an estimated loss of 19.2 million 
kernelweight pounds resulting from the removal of inedible kernels by 
handlers and losses during manufacturing.
    Trade demand is estimated at 556.4 million kernelweight pounds--175 
million pounds for domestic needs and 381.4 million pounds for export 
needs. An inventory adjustment is made to account for supplies of 
salable almonds carried in from the 1993-94 crop year and for supplies 
of salable almonds deemed desirable to be carried out on June 30, 1995, 
for early season shipment during the 1995-96 crop year. After adjusting 
for inventory, the trade demand is calculated at 556.8 million 
kernelweight pounds. This is the quantity of almonds from the estimated 
1994 marketable production deemed necessary to meet trade demand needs. 
The proposed salable percentage of 90 percent would meet those needs.
    The remaining 10 percent (64 million kernelweight pounds) of the 
1994 crop marketable production would be withheld by handlers to meet 
their reserve obligations.
    The percentage of reserve almonds available for export is 
recommended at 0 percent. Although the order permits establishment of a 
percentage of reserve almonds that could be exported, export is 
currently the largest market for California almonds and is not 
considered a secondary or noncompetitive outlet. Therefore, exports 
would be included in trade demand and the export market would not be an 
authorized reserve outlet.
    All or part of reserve almonds could be released to the salable 
category if it is found that the supply made available by the salable 
percentage is insufficient to satisfy 1994-95 trade demand needs, 
including desirable carryover for use during the 1995-96 crop year. The 
Board is required to make any recommendations to the Secretary to 
increase the salable percentage prior to May 15, 1995, pursuant to 
Sec. 981.48 of the order. Alternatively, all or a portion of reserve 
almonds could be sold by the Board, or by handlers under agreement with 
the Board, to governmental agencies or charitable institutions or for 
diversion into almond oil, almond butter, animal feed, or other outlets 
which the Board finds are noncompetitive with existing normal markets 
for almonds.
    A tabulation of the estimates and calculations used by the Board in 
arriving at its recommendations follows:

                  Marketing Policy Estimates--1994 Crop                 
                          [Kernelweight basis]                          
------------------------------------------------------------------------
                                                        Million  Percent
                                                        pounds          
------------------------------------------------------------------------
Estimated Production:                                                   
  1. 1994 Production.................................     640.0         
  2. Loss and Exempt--3.0%...........................      19.2         
  3. Marketable Production...........................     620.8         
Estimated Trade Demand:                                                 
  4. Domestic........................................     175.0         
  5. Export..........................................     381.4         
  6. Total...........................................     556.4         
Inventory Adjustment:                                                   
  7. Carryin 7/1/94..................................      99.6         
  8. Desirable Carryover 6/30/95.....................     100.0         
  9. Adjustment (Item 8 minus item 7)................       0.4         
Salable/Reserve:                                                        
  10. Adjusted Trade Demand (Item 6 plus item 9).....     556.8         
  11. Reserve (Item 3 minus item 10).................      64.0         
  12. Salable % (Item 10 divided by item 3  x  100)..  ........      90 
  13. Reserve % (100% minus item 12).................  ........      10 
------------------------------------------------------------------------

    The ``Guidelines for Fruit, Vegetable, and Specialty Crop Marketing 
Orders'' (Guidelines) issued by the Department in 1982 specify that 110 
percent of recent years' sales be made available to primary markets 
each season. This rule provides an estimated 656.4 million kernelweight 
pounds of California almonds for unrestricted sales (1994 crop salable 
production plus carryin from the 1993 crop) to meet increasing domestic 
and world almond consumption demands. This amount exceeds the actual 
1991-92 record for delivered sales of California almonds by 18 percent. 
Thus, the Guidelines' goals are met.
    The members of the Board that opposed the establishment of salable 
and reserve percentages believe that free competition is best for the 
industry and that the industry should concentrate on building demand 
for almonds rather than imposing a reserve. One member was also 
concerned that enforcement procedures would be difficult as many 
handlers are reluctant to cooperate with a mandated reserve.
    The overall consensus of the Board is that the establishment of 
salable and reserve percentages will reduce market volatility and 
enhance returns to growers, while stabilizing supplies to customers and 
encouraging customer confidence in the industry.
    Establishment of salable and reserve percentages are often 
contentious and controversial in the almond industry. Those opposed to 
reserves generally have philosophical differences with supporters, 
favoring a market situation not affected by supply controls as 
reflected in the Board discussion and vote. However, a majority of the 
Board favored the recommendation, and all Board members (even those 
opposed) have indicated they will support the majority Board 
recommendation and work to ensure fair and equitable administration of 
the reserve, if established.
    Based on the above, the Administrator of the AMS has determined 
that the issuance of this proposed rule would not have a significant 
economic effect on a substantial number of small entities.
    Interested persons are invited to submit their views and comments 
on this proposal. A 15-day comment period is considered appropriate 
because the salable and reserve percentages are recommended to be 
established for almonds received by handlers during the 1994-95 crop 
year, which began on July 1, 1994.

List of Subjects in 7 CFR Part 981

    Almonds, Marketing agreements, Nuts, Reporting and recordkeeping 
requirements.
    For the reasons set forth in the preamble, 7 CFR Part 981 is 
proposed to be amended as follows:

PART 981--ALMONDS GROWN IN CALIFORNIA

    1. The authority citation for 7 CFR Part 981 continues to read as 
follows:

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

Subpart--Salable, Reserve, and Export Percentages

    2. Section 981.239 is added to read as follows:

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


Sec. 981.239  Salable, reserve, and export percentages for almonds 
during the crop year beginning on July 1, 1994.

    The salable, reserve, and export percentages during the crop year 
beginning on July 1, 1994, shall be 90 percent, 10 percent, and 0 
percent, respectively.

    Dated: August 29, 1994.
Eric M. Forman,
Deputy Director, Fruit and Vegetable Division.
[FR Doc. 94-21880 Filed 9-6-94; 8:45 am]
BILLING CODE 3410-02-P