[Federal Register Volume 65, Number 84 (Monday, May 1, 2000)]
[Rules and Regulations]
[Pages 25233-25236]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-10765]



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  Federal Register / Vol. 65, No. 84 / Monday, May 1, 2000 / Rules and 
Regulations  

[[Page 25233]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV00-981-1 IFR]


Almonds Grown in California; Release of the Reserve Established 
for the 1999-2000 Crop Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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

SUMMARY: This rule relaxes volume regulation implemented under the 
California almond marketing order (order) during the 1999-2000 crop 
year (August 1 through July 31). The order regulates the handling of 
almonds grown in California and is locally administered by the Almond 
Board of California (Board). This rule releases, in three stages, 
reserve almonds into normal salable channels. One-third of the reserve 
will be released on the effective date of this rule, the second-third 
will be released on June 1, 2000, and the final-third will be released 
on July 1, 2000. Releasing the reserve is necessary to provide a 
sufficient quantity of almonds to meet anticipated trade demand and 
carryover needs.

DATES: Effective on May 2, 2000; comments received by May 16, 2000 will 
be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-6456; Fax: 
(202) 720-5698, or E-mail: [email protected]. All comments 
should reference the docket number and the date and page number of this 
issue of the Federal Register and will be made available for public 
inspection in the Office of the Docket Clerk during regular business 
hours.

FOR FURTHER INFORMATION CONTACT: Martin Engeler, California Marketing 
Field Office, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, AMS, USDA, 2202 Monterey Street, suite 102B, 
Fresno, California 93721; telephone: (559) 487-5901, Fax: (559) 487-
5906; or George Kelhart, Technical Advisor, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, room 
2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: (202) 
720-2491, Fax: (202) 720-5698.
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, P.O. Box 96456, room 
2525-S, Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: 
(202) 720-5698, or E-mail: [email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order 
No. 981, as amended, (7 CFR part 981), regulating the handling of 
almonds grown in California, hereinafter referred to as the ``order.'' 
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 12988, 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 1999-2000 crop 
year, which began August 1, 1999, and ends July 31, 2000. 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 the date of the entry of the ruling.
    This interim final rule relaxes volume regulation implemented under 
the order during the 1999-2000 crop year (August 1 through July 31). 
The order regulates the handling of almonds grown in California and is 
locally administered by the Board. During the 1999-2000 season, 
handlers were required to withhold as a reserve, from normal 
competitive markets, 22.36 percent of the almonds which they received 
from growers. The remaining 77.64 percent of the crop could be sold by 
handlers to any market at any time. These percentages are referred to 
as reserve and salable percentages, respectively. This rule relaxes 
this regulation on handlers by releasing, in three stages, all almonds 
held as reserve to be available for sale to normal market channels. 
This is necessary to provide a sufficient quantity of almonds to meet 
anticipated trade demand and carryover needs. This action was 
unanimously recommended by the Board at a meeting on April 10, 2000.
    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, Sec. 981.49 of the order 
requires the Board to submit information to the Department on estimates 
of the marketable production of almonds, trade demand needs for the 
year, carryin inventory at the beginning of the year, and the desirable 
carryout inventory at the end of the year. Reserve almonds may be 
disposed of in authorized reserve outlets, such as certified organic 
markets or for use in almond oil,

[[Page 25234]]

almond butter, and animal feed. Reserve almonds can also be released 
for sale into normal marketing channels based on a revision of the 
aforementioned factors and other information. Authority for the Board 
to recommend revisions in the volume regulation percentages is provided 
in Sec. 981.48 of the order. Such revisions must be recommended by May 
15.
    The Board met in May and July of 1999 to review projected crop 
estimates and marketing conditions for the 1999-2000 crop year. A 
record crop of 830 million kernelweight pounds was projected for the 
season. This would produce an estimated 796.8 marketable kernelweight 
pounds after an adjustment for processing losses and exempt product. 
When combined with estimated carryin and adjusted for desired carryout, 
an estimated 827.2 million pounds was available for the 1999-2000 crop 
year. Trade demand was estimated by the Board at 649 million pounds; 
thus, a projected oversupply of almonds existed for the 1999-2000 crop 
year of about 178.2 million pounds. The Board also considered other 
factors such as price levels and fluctuations, increased plantings and 
yields, and weather-related variations in production, and ultimately 
recommended establishment of a reserve for the 1999-2000 season. The 
Department established salable and reserve percentages of 77.64 and 
22.36 percent, respectively, for almonds received by handlers during 
the 1999-2000 crop year, pursuant to a regulation published in the 
Federal Register on November 2, 1999 (64 FR 59107).
    The Board met on April 10, 2000, to consider disposition of the 
reserve. At that time, the Board evaluated marketing and other 
conditions in the industry, and recommended revisions to the marketing 
policy estimates initially used in establishing the reserve. A 
comparison of the initial estimates and revised estimates are contained 
in the following table.

                  Marketing Policy Estimates--1999 Crop
               [Kernelweight basis in millions of pounds]
------------------------------------------------------------------------
                                                  7/12/99      4/10/00
                                                  initial      revised
                                                 estimates    estimates
------------------------------------------------------------------------
Estimated Production:
  1. 1999 Production..........................        830.0        827.4
  2. Loss and Exempt--4.0%....................         33.2         33.1
  3. Marketable Production....................        796.8        794.3
Estimated Trade Demand:
  4. Domestic.................................        190.0        203.0
  5. Export...................................        459.0        492.0
  6. Total....................................        649.0        695.0
Inventory Adjustment:
  7. Carryin 8/1/99...........................        100.4         91.8
  8. Desirable Carryover 7/31/00..............         70.0        191.1
  9. Adjustment (Item 8 minus item 7).........        -30.4         99.3
Salable/Reserve:
  10. Adjusted Trade Demand (Item 6 plus item         618.6        794.3
   9).........................................
  11. Reserve (Item 3 minus item 10)..........        178.2          0.0
  12. Salable % (Item 10 divided by item 3 x         77.64%        100.0
   100).......................................
  13. Reserve % (100% minus item 12)..........       22.36%          0.0
------------------------------------------------------------------------

    In arriving at these estimates, the Board revised its the 1999-2000 
crop estimate of 830 million pounds to 827.4 million pounds, and 
marketable production of 796.8 million pounds to 794.3 million pounds. 
The carryin on August 1, 1999, was initially estimated to be 100.4 
million pounds. That figure was revised to reflect actual carryin of 
91.8 million pounds. Thus, the total available supply for the 1999-2000 
crop year is slightly lower than initially estimated.
    Shipment figures for the year to date were analyzed. Through March 
2000, total industry shipments of almonds were 525.5 million pounds, 
significantly higher than shipments for a comparable period in any 
prior year. Based on historical shipping patterns and shipments to date 
this season, the Board anticipates strong shipment levels to continue 
for the remainder of the season. Therefore, the Board revised its trade 
demand estimate from 649 million pounds to 695 million pounds.
    Although an official crop estimate for the 2000-2001 crop year will 
not be available until May 11, 2000, the consensus in the industry is 
that next year's crop will be significantly smaller than the current 
crop. Several factors have contributed to this conclusion. In addition 
to the usual pattern of a shorter crop following a large crop, the 
weather throughout the production area during the month of February was 
generally cool, rainy, and windy. During this period, almond trees were 
in bloom, and the weather conditions were not conducive to good flower 
pollination. Field observations since the bloom period confirm that 
next year's crop will be significantly smaller. Preliminary industry 
discussions indicate that the 2000-2001 crop will be approximately 550 
million pounds. A crop of that size would not provide a sufficient 
supply of almonds to meet trade needs and provide an adequate carryout 
at the end of the 2000-2001 crop year. Therefore, to provide more 
almonds to satisfy the current year's trade demand and to augment next 
year's supplies, the Board recommended releasing the 1999-2000 crop 
year reserve.
    The Board also considered the timing of releasing reserve product 
to salable market channels. The Board determined that a gradual release 
schedule would best serve the industry. This would prevent a large 
quantity of almonds from being made available for sale by handlers 
immediately, which could put downward pressure on prices and create 
disorderly marketing conditions. Thus, the Board unanimously 
recommended releasing one-third of the reserve as soon as possible, 
one-third on June 1, 2000, and the final-third on July 1, 2000. The 
resulting salable and reserve percentages will be 85.09 percent and 
14.91 percent, respectively, on the effective date of this rule; 92.55 
percent and 7.45 percent, respectively, on June 1, 2000; and 100 and 0 
percent, respectively, on July 1, 2000.
    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. Accordingly, AMS has prepared this initial 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.

[[Page 25235]]

    There are approximately 105 handlers of California almonds who are 
subject to regulation under the marketing order and approximately 6,000 
producers in the regulated area. Small agricultural service firms have 
been defined by the Small Business Administration (13 CFR 121.201) as 
those having annual receipts of less than $5,000,000, and small 
agricultural producers are defined as those whose annual receipts are 
less than $500,000.
    Based on the most current data available, about 54 percent of 
almond handlers ship under $5,000,000 worth of almonds and 46 percent 
ship over $5,000,000 worth on an annual basis. In addition, based on 
production and grower prices reported by the National Agricultural 
Statistics Service (NASS), and the total number of almond growers, the 
average annual grower revenue is approximately $195,000. In view of the 
foregoing, it can be concluded that the majority of handlers and 
producers of California almonds may be classified as small entities.
    Pursuant to Secs. 981.47 and 981.49, during the 1999-2000 crop 
year, handlers were required to withhold as a reserve, from normal 
competitive markets, 22.36 percent of the almonds which they received 
from growers (64 FR 59107, November 2, 1999). The remaining 77.64 
percent of the crop could be sold by handlers to any market at any 
time. Volume regulation was implemented because the available supply of 
almonds for the 1999-2000 crop year, adjusted by carryin and desired 
carryout, was estimated to be about 827 million pounds, which exceeded 
the estimated trade demand needs of about 649 million pounds.
    Pursuant to Sec. 981.48 of the order, this rule releases 7.45 
percent of the reserve on the effective date of this rule, 7.45 percent 
on June 1, 2000, and 7.45 percent on July 1, 2000. Releasing the 
reserve is necessary to provide a sufficient quantity of almonds to 
meet anticipated trade demand and carryover needs. Shipment levels 
through March 2000 and anticipated strong shipments for the remainder 
of the season lead to an increased trade demand estimate from 649 
million pounds to 695 million pounds. In addition, because a smaller 
2000-2001 crop is expected (approximately 550 million pounds), the 
industry would like to increase the amount of 1999-2000 carryout 
inventory from 70 million pounds to 191.2 million pounds to augment 
supplies during the next crop year. Timing of the release is structured 
so that all 178 million pounds of reserve product will not enter the 
market at one time.
    This action is expected to have a positive effect on producers and 
handlers of almonds. It gradually removes the regulatory requirement 
that handlers hold product in reserve or sell it to reserve outlets. 
Handlers will be able to sell reserve almonds into normal markets at 
prevailing prices (currently in the range of $1.25 per pound to $1.60 
per pound) as opposed to selling them into lower value reserve outlets 
(ranging from 8 to 15 cents per pound for oil or 4 to 5 cents per pound 
for animal feed). Although reserve almonds can be sold to organic 
markets or for use in the manufacture of almond butter at higher prices 
than other reserve outlets, the quantity that can be sold is limited 
because those markets are limited. Handlers and growers should be able 
to achieve higher total revenue for their product by selling to normal 
markets, because trade demand for almonds has increased significantly 
from early season estimates, and price levels have also improved in 
recent months.
    Releasing reserve almonds into the market in three stages will help 
to ensure that a large supply of almonds is not available for sale by 
handlers at the same time, which could create a temporary oversupply 
and have a negative impact on price levels. The staged release will 
also help to ensure that additional product will be available to carry 
into the following crop year to augment anticipated short supplies.
    This action is intended to promote orderly marketing conditions for 
the remainder of the 1999-2000 crop year and also leading into the 
2000-2001 crop year, for the benefit of producers and handlers, 
regardless of size.
    One alternative considered was to release all of the reserve 
product to normal market channels as soon as possible. This alternative 
was not recommended because it was believed that too much product would 
be available at one time, creating a short-term oversupply situation, 
which could negatively impact prices and market conditions. Another 
alternative considered was to release one-third of the reserve as soon 
as possible, and if the May 11, 2000, crop estimate issued by NASS for 
the 2000-2001 crop is less than 525 million pounds, to release the 
entire reserve as soon as possible after that. If the May crop estimate 
is more than 525 million pounds, this alternative would release one-
third of the reserve as soon as possible after the estimate is issued 
and the final one-third on July 1, 2000. This was not recommended. The 
Board decided that three equal releases were preferable.
    All the scenarios considered had the common goal of releasing all 
the 1999-2000 crop year reserve to the salable category. The Board 
ultimately recommended releasing one-third of the reserve as soon as 
possible (on the effective date of this rule), one third on June 1, 
2000, and the final one-third on July 1, 2000. The Board believed this 
would best achieve orderly marketing objectives. Adequate supplies 
should be available to meet market needs for the remainder of the crop 
year and for carryin to the next crop year, thus satisfying market 
needs and maintaining market and price stability.
    This rule will not impose any additional reporting and 
recordkeeping requirements on either small or large handlers. As with 
all Federal marketing order programs, reports and forms are 
periodically reviewed to help reduce information requirements and 
duplication by industry and public sector agencies.
    In addition, the Department has not identified any relevant Federal 
rules that duplicate, overlap, or conflict with this rule.
    Further, the Board's meeting was widely publicized throughout the 
almond industry and all interested persons were invited to attend the 
meeting and participate in Board deliberations. Like all Board 
meetings, the April 10, 2000, meeting was a public meeting and all 
entities, both large and small, were able to express their views on 
this issue.
    Also, the Board has a number of appointed committees to review 
certain issues and make recommendations to the Board. The Board's 
Reserve Committee met on April 10, 2000, and discussed this issue in 
detail. That meeting was also a public meeting and both large and small 
entities were able to participate and express their views. Finally, 
interested persons are invited to submit information on the regulatory 
and informational impacts of this action on small businesses.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at the 
following website: http://www.ams.usda.gov/fv/moab.html. Any questions 
about the compliance guide should be sent to Jay Guerber at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    After consideration of all relevant material presented, including 
the Board's recommendation, and other information, it is found that 
this interim final rule, as hereinafter set forth, will tend to 
effectuate the declared policy of the Act.
    A comment period of 15 days is provided to allow interested persons 
to

[[Page 25236]]

respond to this interim final rule. A comment period of 15 days is 
deemed appropriate to allow the Department sufficient time to consider 
comments prior to the scheduled releases on June 1, and July 1, 1999. 
All comments timely received will be considered in finalizing this 
action.
    Pursuant to 5 U.S.C. 553, it is also found and determined upon good 
cause that it is impracticable, unnecessary, and contrary to the public 
interest to give preliminary notice prior to putting this rule into 
effect and that good cause exists for not postponing the effective date 
of this rule until 30 days after publication in the Federal Register 
because: (1) This rule relaxes requirements currently in effect by 
increasing the quantity of almonds that may be marketed; (2) the 1999-
2000 crop year ends July 31, (3) this rule was discussed at a public 
meeting and interested persons had an opportunity to provide input; (4) 
the rule was unanimously recommended by the Board; and (5) this rule 
provides a 15-day comment period and any comments received will be 
considered prior to finalization of this rule.

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

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

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

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


    2. In Part 981, Sec. 981.240 is revised to read as follows:


Sec. 981.240  Salable and reserve percentages for almonds during the 
crop year beginning on August 1, 1999.

    The salable and reserve percentages during the crop year beginning 
on August 1, 1999, shall be 85.09 percent and 14.91 percent, 
respectively, beginning on May 2, 2000; 92.55 percent and 7.45 percent, 
respectively, beginning on June 1, 2000, and 100 percent and 0 percent, 
respectively, beginning on July 1, 2000.

    Dated: April 25, 2000.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-10765 Filed 4-28-00; 8:45 am]
BILLING CODE 3410-02-P