[Federal Register Volume 62, Number 71 (Monday, April 14, 1997)]
[Rules and Regulations]
[Pages 18026-18029]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-9568]


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

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 982

[Docket No. FV96-982-2 FIR]


Hazelnuts Grown in Oregon and Washington; Establishment of 
Interim and Final Free and Restricted Percentages for the 1996-97 
Marketing Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: The Department of Agriculture (Department) is adopting as a 
final rule, without change, the provisions of an interim final rule 
which established interim and final free and restricted percentages for 
domestic inshell hazelnuts for the 1996-97 marketing year under the 
Federal marketing order for hazelnuts grown in Oregon and Washington. 
The percentages allocate the quantity of domestically produced 
hazelnuts which may be marketed in the domestic inshell market. The 
percentages are intended to stabilize the supply of domestic inshell 
hazelnuts to meet the limited domestic demand for such hazelnuts and 
provide reasonable returns to producers. This rule was recommended 
unanimously by the Hazelnut Marketing Board (Board), which is the 
agency responsible for local administration of the order.

EFFECTIVE DATE: May 14, 1997.

FOR FURTHER INFORMATION CONTACT: Teresa L. Hutchinson, Marketing 
Specialist, Northwest Marketing Field Office, Fruit and Vegetable 
Division, Agricultural Marketing Service, USDA, 1220 SW Third Ave., 
Room 369, Portland, OR 97204; telephone (503) 326-2055 or Mark A. 
Slupek, Marketing Specialist, Marketing Order Administration Branch, 
Fruit and Vegetable Division, AMS, USDA, Room 2525-S, P.O. Box 96456, 
Washington, DC 20090-6456; telephone (202) 205-2830. Small businesses 
may request information on compliance with this regulation by 
contacting: Jay Guerber, Marketing Order Administration Branch, Fruit 
and Vegetable Division, AMS, USDA, P.O. Box 96456, Room 2525-S, 
Washington, DC 20090-6456; telephone (202) 720-2491; FAX (202) 720-
5698.


[[Page 18027]]


SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing 
Agreement No. 115 and Order No. 982 (7 CFR part 982), both as amended, 
regulating the handling of hazelnuts grown in Oregon and Washington, 
hereinafter referred to as the ``order.'' The marketing agreement and 
order are effective under the Agricultural Marketing Agreement Act of 
1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the 
``Act.''
    The Department is issuing this rule in conformance with Executive 
Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. It is intended that this action apply to all 
merchantable hazelnuts handled during the 1996-97 marketing year (July 
1, 1996--June 30, 1997). 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 to review the Secretary's 
ruling on the petition, provided an action is filed not later than 20 
days after date of the entry of the ruling.
    This rule establishes marketing percentages which allocate the 
quantity of inshell hazelnuts that may be marketed in domestic markets. 
The Board is required to meet prior to September 20 of each marketing 
year to compute its marketing policy for that year and compute and 
announce an inshell trade demand if it determines that volume 
regulations would tend to effectuate the declared policy of the Act. 
The Board also computes and announces preliminary free and restricted 
percentages for that year.
    The inshell trade demand is the amount of inshell hazelnuts that 
handlers may ship to the domestic market throughout the marketing 
season. The order specifies that the inshell trade demand be computed 
by averaging the preceding three ``normal'' years' trade acquisitions 
of inshell hazelnuts, rounded to the nearest whole number. The Board 
may increase the three-year average by up to 25 percent, if market 
conditions warrant an increase. The Board's authority to recommend 
volume regulations and the computations used to determine released 
percentages are specified in Sec. 982.40 of the order.
    The National Agricultural Statistics Service (NASS) estimated 
hazelnut production at 20,000 tons for the Oregon and Washington area. 
After discussion, the consensus of the Board was to use the NASS 
estimate as the basis for the preliminary, interim final and final free 
and restricted percentage computations.
    The majority of domestic inshell hazelnuts are marketed in October, 
November, and December. By November, the marketing season is well under 
way.
    The quantity marketed is broken down into free and restricted 
percentages to make available hazelnuts which may be marketed in 
domestic inshell markets (free) and hazelnuts which are exported, 
shelled or otherwise disposed of (restricted). The preliminary free 
percentage releases 80 percent of the adjusted inshell trade demand. 
The preliminary free percentage is expressed as a percentage of the 
total supply subject to regulation (supply) and is based on the 
preliminary crop estimate. The Board used the NASS crop estimate of 
20,000 tons.
    At its August 29, 1996, meeting, the Board computed and announced 
preliminary free and restricted percentages of 16 percent and 84 
percent, respectively. The purpose of releasing only 80 percent of the 
inshell trade demand under the preliminary percentage was to guard 
against underestimates of crop size. The preliminary free percentage 
released 3,238 tons of hazelnuts from the 1996 supply for domestic 
inshell use. The preliminary restricted percentage of the 1996 supply 
for export and kernel markets totaled 13,007 tons.
    Under the order, the Board must meet a second time, on or before 
November 15, to recommend interim final and final percentages. The 
Board uses then current crop estimates to calculate the interim final 
and final percentages. The interim final percentages are calculated in 
the same way as the preliminary percentages and release the remaining 
20 percent (to total 100 percent of the inshell trade demand) 
previously computed by the Board. Final free and restricted percentages 
may release up to an additional 15 percent of the average of the 
preceding three years' trade acquisitions to provide an adequate 
carryover into the following season. The final free and restricted 
percentages must be effective by June 1, at least 30 days prior to the 
end of the marketing year, June 30. The final free and restricted 
percentages can be made effective earlier, if recommended by the Board 
and approved by the Secretary. Revisions in this marketing policy can 
be made until February 15 of each marketing year, but the inshell trade 
demand can only be revised upward, consistent with Sec. 982.40(e).
    The Board met on November 12, 1996, and reviewed and approved an 
amended marketing policy. The Board recommended that the three-year 
average trade acquisition figure of 4,513 tons be increased by 100 tons 
to provide product for an experimental marketing program using roasted 
inshell hazelnuts. The Board also recommended the establishment of 
interim final and final free and restricted percentages. Interim final 
percentages were recommended at 20 percent free and 80 percent 
restricted. The interim final percentage makes an additional 809 tons 
of inshell hazelnuts available for the domestic inshell market 
including roasted product. The interim final marketing percentages are 
based on the industry's final production estimates (20,000 tons) and 
release 4,047 tons to the domestic inshell market from the 1996 supply 
subject to regulation. The interim final restricted percentage resulted 
in a restricted obligation of 13,007 tons.
    The final free and restricted percentages were recommended at 23 
percent and 77 percent, respectively. The Board also recommended that 
the final percentages be effective on June 1, 1997. The established 
final marketing percentages release for domestic inshell use an 
additional 677 tons from the supply subject to regulation. Thus, a 
total of 4,724 tons of inshell hazelnuts will be released from the 1996 
supply for domestic inshell use.
    The marketing percentages are based on the Board's production 
estimates and the following supply and demand information for the 1996-
97 marketing year:

------------------------------------------------------------------------
                       Inshell supply                            Tons   
------------------------------------------------------------------------
(1) Total production (NASS estimate).......................       20,000

[[Page 18028]]

                                                                        
(2) Less substandard, farm use (disappearance).............        1,362
(3) Merchantable production (the Board's adjusted crop                  
 estimate).................................................       18,638
(4) Plus undeclared carryin as of July 1, 1996, subject to              
 regulation................................................        1,668
(5) Supply subject to regulation (Item 3 plus Item 4)......       20,306
                                                                        
                    Inshell Trade Demand                                
                                                                        
(6) Average trade acquisitions of inshell hazelnuts for                 
 three prior years.........................................        4,513
(7) Increase to encourage increased sales (2.2 percent of               
 Item 6)...................................................          100
(8) Less declared carryin as of July 1, 1996, not subject               
 to regulation.............................................          566
(9) Adjusted Inshell Trade Demand..........................        4,047
(10) 15 percent of the average trade acquisitions of                    
 inshell hazelnuts for three prior years (Item 6)..........          677
(11) Adjusted Inshell Trade Demand plus 15 percent for                  
 carryout (Item 9 plus Item 10)............................        4,724
------------------------------------------------------------------------



                                                                        
                  Percentages                       Free      Restricted
(12) Interim final percentages (Item 9 divided                          
 by Item 5) x 100.............................           20           80
(13) Final percentages (Item 11 divided by                              
 Item 5) x 100................................           23           77
------------------------------------------------------------------------

    In addition to complying with the provisions of the marketing 
order, the Board also considered the Department's 1982 ``Guidelines for 
Fruit, Vegetable, and Specialty Crop Marketing Orders'' (Guidelines) 
when making its computations in the marketing policy. This volume 
control regulation provides a method to collectively limit the supply 
of inshell hazelnuts available for sale in domestic markets. The 
Guidelines provide that the domestic inshell market has available a 
quantity equal to 110 percent of prior years' shipments before 
secondary market allocations are approved. This provides for plentiful 
supplies for consumers and for market expansion, while retaining the 
mechanism for dealing with oversupply situation. At its November 12, 
1996, meeting, the Board recommended that an increase of 2.2 percent 
(100 tons) for market expansion be included in the inshell trade demand 
which was used to compute the interim percentages. The established 
final percentages are based on the final inshell trade demand, and will 
make available an additional 677 tons for desirable carryout. The total 
free supply for the 1996-97 marketing year is 5,290 tons of hazelnuts, 
which is the final trade demand of 4,724 tons plus the declared carryin 
of 566 tons. This amount is 117 percent of prior years' sales and 
exceeds the goal of the Guidelines.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this rule 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 
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 1,000 producers of hazelnuts in the 
production area and approximately 23 handlers subject to regulation 
under the marketing order. 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, and small agricultural 
service firms are defined as those whose annual receipts are less than 
$5,000,000. Using this criteria, virtually all of the producers are 
small agricultural producers and an estimated 20 of the 23 handlers are 
small agricultural service firms. Thus, the majority of hazelnut 
producers and handlers may be classified as small entities.
    Board meetings are widely publicized in advance of the meetings and 
are held in a location central to the production area. The meetings are 
open to all industry members and other interested persons--who are 
encouraged to participate in the deliberations and voice their opinions 
on topics under discussion. Thus, Board recommendations can be 
considered to represent the interests of small business entities in the 
industry.
    Many years of marketing experience led to the development of the 
current volume control procedures. These procedures have helped the 
industry solve its marketing problems by keeping inshell supplies in 
balance with domestic needs. The current volume control procedures 
fully supply the domestic inshell market, provide for market expansion, 
and help prevent oversupplies in that market.
    Industry statistics show that total hazelnut production has varied 
widely over the last ten years, from a low of 13,000 tons in 1989 to a 
high of 41,000 tons in 1993. Average production has been around 24,000 
tons. As crop size has fluctuated, volume regulations have contributed 
towards orderly marketing and market stability, and have helped 
moderate the variation in returns for all growers and handlers, both 
large and small. For instance, production in the shortest crop year 
(1989) was 54 percent of the ten-year average (1985-1995). Production 
in the biggest crop year (1993) was 170 percent of the ten-year 
average. The percentage releases provide all handlers with the 
opportunity to benefit from the most profitable domestic inshell 
market. That market is available to all handlers, regardless of handler 
size.
    NASS statistics show that the grower price per pound has increased 
steadily over the last four years from $.28 in 1992 to $.46 in 1995.
    While the level of benefits of this rulemaking are difficult to 
quantify, it is clear that the stabilizing effects of the volume 
regulations are still required in order to help both small and large 
handlers to maintain and expand markets even though hazelnut supplies 
fluctuate widely from season to season.
    Hazelnuts produced under the order comprise virtually all of the 
hazelnuts produced in the U.S. This production represents approximately 
3 percent of total U.S. tree nut production and approximately 3 percent 
of the world's hazelnut production.
    This volume control regulation provides a method for the U.S. 
hazelnut industry to limit the supply of domestic inshell hazelnuts 
available for sale in the U.S. Section 982.40 of the order establishes 
a procedure and computations for the Board to follow in recommending to 
the Secretary the

[[Page 18029]]

preliminary, interim final, and final quantities of hazelnuts to be 
released to the free and restricted markets each marketing year. The 
program results in plentiful supplies for consumers and for market 
expansion while retaining the mechanism for dealing with oversupply 
situations.
    The marketing order authority for regulating the quantity of 
hazelnuts marketed is intended to stabilize markets, in the interest of 
producers, handlers, and consumers. The restricted percentage limits 
the amount of the crop that goes into the primary market (domestic 
inshell market) so that this market is adequately supplied. Inshell 
hazelnuts sold to the domestic market provide higher returns to the 
industry than are obtained from shelling. The domestic inshell market 
is quite small and prone to oversupply in the absence of volume 
regulation. The excess that is not needed for the primary market is set 
aside and sold into noncompetitive market channels where such sales 
will not depress primary market prices. The quantity control authority 
provides the industry with a framework for softening the extremes in 
supply and prices that can occur with agricultural commodities, like 
hazelnuts, subject to the vagaries of nature.
    Currently, U.S. hazelnut production can be successfully allocated 
between the inshell domestic and secondary markets. One of the best 
secondary markets for hazelnuts is the export market. Inshell hazelnuts 
produced under the marketing order compete well in export markets 
because of the high quality of U.S. hazelnuts. Europe, and Germany in 
particular, is the major export market for U.S. produced inshell 
hazelnuts. A third market is for shelled hazelnuts sold domestically. 
Domestically produced kernels generally command a higher price in the 
domestic market than imported kernels. The industry is continuing its 
efforts to develop and expand secondary markets, especially the 
domestic kernel (shelled) market. Small business entities, both 
producers and handlers, benefit from the expansion efforts resulting 
from this program.
    The critical marketing problem confronting the hazelnut industry is 
that the available supply for the 1996-97 marketing year far exceeds 
domestic inshell market needs. The quantity needed for the domestic 
inshell market during the 1996-97 marketing year (4,724 tons) is less 
than one-fourth of the supply subject to regulation (20,306 tons). 
Hence, the Board determined that volume regulation was needed to 
stabilize supplies and prices. Without the supply correction fostered 
by regulation in 1996-97, the Board believed that weak marketing 
conditions and price cutting would cause the industry's economic 
condition to deteriorate.
    In considering quantity control for the 1996-97 marketing year, the 
Board considered the estimated tonnage of merchantable hazelnuts 
expected to be produced during the 1996-97 marketing year, the 
estimated tonnage of inshell hazelnuts carried in from the previous 
marketing year available for marketing as inshell hazelnuts during 
1996-97, all available information on possible markets for the crop 
taking into consideration anticipated imports, inventory in marketing 
channels, prices, competing nut supplies, and other economic conditions 
which could impact the marketing of the 1996-97 inshell hazelnut crop. 
This all resulted in the Board's recommendation to limit the amount of 
the 1996-97 crop going into the domestic inshell market and the 
marketing percentage computation table set forth earlier in this 
document.
    No change has occurred in the relationship between supply and 
demand since the interim final rule was issued, and that rule made a 
sufficient volume of free hazelnuts available for the domestic inshell 
market. Hence, a release of additional supplies at this time of the 
season would make more hazelnuts available for this market than are 
needed, resulting in disorderly marketing conditions. Also, the 
additional supplies could adversely impact the marketing of the 
upcoming crop.
    It is the Department's view that the marketing percentages 
recommended by the Board, and established by the Department, for the 
1996-97 marketing year have provided all members of the industry, both 
large and small, with a means for stabilizing supplies and prices, and 
for maintaining and expanding markets for hazelnuts.
    There are some reporting, recordkeeping and other compliance 
requirements under the marketing order. The reporting and recordkeeping 
burdens are the minimum necessary for compliance purposes and for 
developing statistical data for maintenance of the program. The forms 
require information which is readily available from handler records and 
which can be provided without data processing equipment or trained 
statistical staff. As with other, similar marketing order programs, 
reports and forms are periodically studied to reduce or eliminate 
duplicate information collection burdens by industry and public sector 
agencies. This final rule does not change those requirements.
    As noted in the initial regulatory flexibility analysis, the 
Department has not identified any relevant Federal rules that 
duplicate, overlap or conflict with this regulation.
    The interim final rule was issued by the Department on December 31, 
1996; put on public display at the Office of the Federal Register on 
January 7, 1997; and published in the Federal Register (62 FR 1035, 
January 8, 1997), with an effective date of January 9, 1997. The Board 
manager mailed information concerning that action to all known industry 
members, and it was also made available through the Internet by the 
Office of the Federal Register. That rule provided a 30-day comment 
period which ended February 7, 1997. No comments were received 
concerning either the interim final rule or the initial regulatory 
flexibility analysis.
    After consideration of all relevant material presented, including 
the Board's recommendation, and other information, it is found that 
finalizing the interim final rule, without change, as published in the 
Federal Register (62 FR 1035, January 8, 1997), will tend to effectuate 
the declared policy of the Act.

List of Subjects in 7 CFR Part 982

    Filberts, Hazelnuts, Marketing agreements, Nuts, Reporting and 
recordkeeping requirements.

    For the reasons set forth in the preamble, 7 CFR part 982 is 
amended as follows:

PART 982--HAZELNUTS GROWN IN OREGON AND WASHINGTON

    Accordingly, the interim final rule amending 7 CFR part 982 which 
was published at 62 FR 1035 on January 8, 1997, is adopted as a final 
rule without change.

    Dated: April 8, 1997.
Sharon Bomer Lauritsen,
Acting Director, Fruit and Vegetable Division.
[FR Doc. 97-9568 Filed 4-11-97; 8:45 am]
BILLING CODE 3410-02-P