[Federal Register Volume 60, Number 151 (Monday, August 7, 1995)]
[Rules and Regulations]
[Pages 40059-40061]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-19326]



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DEPARTMENT OF AGRICULTURE
7 CFR Part 981

[FV94-981-3FIR]


Almonds Grown in California; Release of the Reserve Established 
for the 1994-95 Crop Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting as a 
final rule, without change, the provisions of an interim final rule 
relaxing volume regulations imposed on California almond handlers for 
the 1994-95 crop year by releasing reserve almonds into salable 
channels. Volume regulations were imposed under the authority of the 
Federal marketing order which regulates the handling of almonds grown 
in California and is locally administered by the Almond Board of 
California (Board). During the 1994-95 season, handlers were required 
to withhold as a reserve, from normal competitive markets, 10 percent 
of the almonds which they received from growers. The remaining 90 
percent of the crop could be sold by handlers to any market at any 
time. The interim final rule relaxed these regulations on handlers by 
releasing the reserve percentage to the salable category and was 
necessary to provide a sufficient quantity of almonds to meet 
anticipated trade demand and carryover needs.

DATES: Effective on September 6, 1995.

FOR FURTHER INFORMATION CONTACT: Kathleen M. Finn, Marketing 
Specialist, Marketing Order Administration Branch, Fruit and Vegetable 
Division, AMS, USDA, room 2522-S, P.O. Box 96456, Washington, DC 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 102B, Fresno, California 93721; telephone: (209) 487-5901, or fax 
(209) 487-5906.

SUPPLEMENTARY INFORMATION: This 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 rule in 
accordance with Executive Order 12866.
    This rule has been reviewed under Executive Order 12778, Civil 
Justice Reform. Under the provisions of the marketing order now in 
effect, salable and reserve percentages may be established for almonds 
during any crop year. This rule revises the salable and reserve 
percentages for marketable California almonds during the 1994-95 crop 
year. This 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 exempted 
therefrom. A handler is afforded the opportunity for a hearing on the 
petition. After the hearing the Secretary 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 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 the entry of the ruling. 

[[Page 40060]]

    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 have been 
defined by the Small Business Administration (13 CFR 121.601) as those 
having annual receipts of less than $5,000,000, and small agricultural 
producers are defined as those whose annual receipts are less than 
$500,000. The majority of handlers and producers of California almonds 
may be classified as small entities.
    This rule finalizes the relaxation of volume regulations imposed on 
California almond handlers for the 1994-95 crop year (July 1 through 
June 30). During the 1994-95 season, handlers were required to 
withhold, from normal domestic and export markets, 10 percent of the 
merchantable almonds which they received from growers (reserve 
percentage). The remaining 90 percent of almonds received by handlers 
could be sold to any market at any time (salable percentage). Volume 
regulations were recommended by the Board and imposed on handlers to 
lessen the impact of a large almond supply for the 1994-95 season. 
Salable and reserve percentages were established through publication of 
a final rule in the Federal Register on December 9, 1994 [59 FR 63693]. 
On May 12, 1995, the Board determined that volume regulations on almond 
handlers were no longer necessary and recommended that the entire 
reserve be released to provide a sufficient quantity of almonds to meet 
anticipated trade demand and carryover needs.
    The interim final rule was issued on May 25, 1995, and published in 
the Federal Register (60 FR 28520, June 1, 1995), with an effective 
date of May 25, 1995. That rule provided a 30-day comment period which 
ended July 3, 1995. No comments were received.
    Section 981.47 of the almond marketing order provides authority for 
the Secretary, based on recommendations by the Board and the analysis 
of other available information, to establish salable and reserve 
percentages for almonds during a crop year. To aid the Secretary in 
fixing the salable and reserve percentages, section 981.49 of the order 
requires the Board to submit information to the Department on estimates 
of the marketable production of almonds, combined domestic and export 
trade demand for the year, carryin inventory at the beginning of the 
year, and the desirable carryover inventory at the end of the year. 
Authority for the Board to recommend revisions in the volume regulation 
percentages is provided in section 981.48 of the order. Such revisions 
must be recommended by May 15.
    The Board met in July of 1994 to review projected crop estimates 
and marketing conditions for the 1994-95 almond season. A very large 
crop of 640 million kernelweight pounds was projected for the season. 
Estimated shipments for the two prior seasons were 535.9 million pounds 
for 1992 crop almonds and 497.7 million pounds for 1993 crop almonds.
    Variations in production from season-to-season can cause wide 
fluctuations in prices. For example, the Board estimated that grower 
prices increased from $1.26 per pound for 1992 crop almonds to $2.00 
per pound for the smaller, 1993 crop almonds. The large 1994 California 
almond crop estimate 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 is 
best achieved in the presence of stable and orderly market conditions. 
Thus, the Board recommended that the volume regulation provisions of 
the order be utilized for the 1994-95 season as a supply management 
tool, with 10 percent of the 1994 crop almonds being held by handlers 
as a reserve.
    On May 12, 1995, the Board met in Modesto, California, and 
unanimously recommended releasing the reserve established for the 1994-
95 crop year. Thus, the salable percentage will increase from 90 to 100 
percent and the reserve percentage will decrease from 10 to 0 percent. 
The Board considered a number of factors in arriving at its 
recommendation to release the reserve. The 1994-95 almond crop is now 
estimated at 727 million pounds, far above the initial 640 million 
pound estimate. Shipments for the year are expected to exceed 600 
million pounds. Further, it appears that production in the rest of the 
world is well below normal. Production in Spain, the world's second 
largest producer of almonds, fell well below usual and is estimated to 
have been about 75 million pounds. Spain, California's biggest 
competitor in the world almond markets, became the United States' 
fourth largest export market.
    At the meeting, the Board also considered a crop estimate for 
California almonds for the 1995-96 season provided by the California 
Agricultural Statistics Service (CASS). That forecast is based on a 
survey of 200 growers. CASS released its crop estimate of 430 million 
kernelweight pounds on May 11. The estimate is relatively small 
compared with normal almond production for a year. An extremely wet 
spring that prohibited successful pollination of almond trees during 
the critical bloom period as well as crop losses due to trees having 
been blown over by high winds have resulted in the predicted small 
yield in California. Very short carryin inventories of 1993 crop 
almonds into the current season combined with reduced production from 
California competitors resulted in higher than anticipated demand for 
California almonds.
    On June 28, 1995, CASS released another forecast, which is based on 
actual almond counts from across the State. This forecast for the 1995-
96 crop year is 310 million kernelweight pounds of almonds, 120 million 
pounds less than estimated in the previous estimate. Although this 
forecast was not available when the Board recommended releasing the 
reserve, this estimate further supports releasing the reserve.
    As required under the order, the Board revised a number of 
estimates that had been considered when volume regulation was first 
recommended in July 1994. The Board's current estimates of marketable 
supply, combined domestic and export trade demand for 1994-95, and 
desirable carryover to be available for the 1995-96 crop year are shown 
below. The Board considered these revised estimates in arriving at its 
recommendation to release the 1994-95 reserve. The estimates used by 
the Board to establish the original volume regulations for the year are 
shown for comparison.


[[Page 40061]]
                  Marketing Policy Estimates--1994 Crop                 
               [Kernelweight basis in millions of pounds]               
------------------------------------------------------------------------
                                                     12/9/94    5/12/95 
                                                     Initial    Revised 
                                                    estimates  estimates
------------------------------------------------------------------------
Estimated Production:                                                   
  1. 1994 Production..............................      640.0      727.1
  2. Loss and Exempt--3.0%........................       19.2       21.8
  3. Marketable Production........................      620.8      705.3
Estimated Trade Demand:                                                 
  4. Domestic.....................................      175.0      152.8
  5. Export.......................................      381.4      449.0
  6. Total........................................      556.4      601.8
Inventory Adjustment:                                                   
  7. Carryin 7/1/94...............................       99.6      102.6
  8. Desirable Carryover 6/30/95..................      100.0      206.1
  9. Adjustment (Item 8 minus item 7).............        0.4      103.5
Salable/Reserve:                                                        
  10. Adjusted Trade Demand (Item 6 plus item 9)..      556.8      705.3
  11. Reserve (Item 3 minus item 10)..............       64.0        0  
  12. Salable % (Item 10 divided by item 3 x 100).   \1\ 90        100.0
  13. Reserve % (100% minus item 12)..............   \1\ 10         0   
------------------------------------------------------------------------
\1\ Percent.                                                            


    As previously mentioned and reflected in the table, estimated 
almond crop production for the 1994-95 season increased from 640 to 
727.1 million kernelweight pounds. Estimated weight losses resulting 
from the removal of inedible kernels by handlers and losses during 
manufacturing also increased from 19.2 to 21.8 million kernelweight 
pounds. Therefore, marketable production is expected at 705.3 million 
kernelweight pounds.
    The Board's estimated trade demand (or shipments) also increased 
from 556.5 million kernelweight pounds to a total of 601.8 kernelweight 
pounds. If the estimates are achieved, this would set a new record for 
the California almond industry. Although estimated domestic trade 
demand decreased from 175 to 152.8 million kernelweight pounds, 
estimated export trade demand increased sharply from 381.4 to 449 
million kernelweight pounds. Almond production in the rest of the world 
was well below normal, contributing to a significant increase in the 
amount of California almonds shipped into export markets.
    The Board also revised its inventory estimates. The carryin 
figure--supplies of salable almonds carried in from the 1993-94 crop 
year--was slightly revised from 99.6 to 102.6 million kernelweight 
pounds. The desirable carryout figure--supplies of salable almonds to 
be carried out on June 30 for early season shipment during the 1995-96 
crop year--was revised from 100 to 206.1 million kernelweight pounds. 
With the projected short crop for the upcoming season, the carryout 
figure was significantly increased to provide a more adequate supply of 
almonds available to meet early market needs. After taking into account 
the carryin and desirable carryover figures, the adjusted trade demand 
was increased from 556.8 to 705.3 million kernelweight pounds, an 
amount equal to the Board's estimate of marketable production.
    The order also permits the Board to recommend the establishment of 
a percentage of reserve almonds that can be exported. However, export 
is currently the largest market for California almonds and is not 
considered a secondary or noncompetitive outlet. For the 1994-95 crop 
year, exports were included in the trade demand and the export market 
was not an authorized reserve outlet. The percentage of reserve almonds 
available for export was established at 0 percent in the final rule 
previously cited that established volume regulation for the 1994-95 
crop. The export percentage is not changed as a result of this action.
    The Board believed that immediate release of the reserve will 
positively impact market stability by increasing the amount of almonds 
available to the market prior to the harvest of the 1995 crop, and by 
augmenting the overall supply available for the upcoming season. The 
interim final rule is expected to facilitate a smooth transition into 
the 1995-96 season. Since market stability is of paramount importance 
in achieving long-term industry health, the Board concluded that there 
are no viable alternatives to its recommendation.
    This rule is not expected to impose any additional costs on 
handlers or producers because release of the reserve will eliminate the 
need for handlers to store almonds and will allow the product to enter 
an eager market in a smooth fashion. Therefore, the Administrator of 
the AMS has determined that the issuance of this final rule will not 
have a significant economic effect on a substantial number of small 
entities.
    After consideration of all relevant material presented, including 
the Board's recommendation, and other available information, it is 
found that finalizing the interim final rule, without change, as 
published in the Federal Register (60 FR 28520, June 1, 1995) will tend 
to effectuate the declared policy of the Act.

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 
amended as follows:

PART 981--ALMONDS GROWN IN CALIFORNIA

    Accordingly, the interim final rule amending 7 CFR part 981 which 
was published at 60 FR 28520 on June 1, 1995, is adopted as a final 
rule without change.

    Dated: July 31, 1995.
Martha B. Ransom,
Acting Deputy Director, Fruit and Vegetable Division.
[FR Doc. 95-19326 Filed 8-4-95; 8:45 am]
BILLING CODE 3410-02-P